The unsolicited tender offer for OSI Pharmaceuticals (2010)

Choosing to buy without consent

The heart of this decision is a single fact: rebuffed, Astellas went on buying anyway. Japanese drugmakers have rarely launched an unsolicited bid for an American company, and hostile means — which invite defences and bid up the price — are normally to be avoided. That Astellas went ahead can be read as a matter of time: with the patents on two mainstay products expiring and revenue certain to thin, there was no leisure in which to build a new oncology pillar. The way it raised the price from $52 to $57.50 to force agreement suggests a company that had to make this acquisition work.

Whether an unsolicited acquisition was right cannot, however, be judged by whether it closed. Whether the business bought went on to support earnings, and whether it produced value worth the premium paid, are questions answered over time. In fact the oncology franchise that came from OSI lifted the merged Astellas’s results — while a different problem, dependence on one product, surfaced in later years. How to grow, and how to spread, a business taken by force: the 2010 decision left that on the agenda for a long time afterwards.