Japan's Takeda Will Pay $9B for Millennium

Takeda Pharmaceuticals, Japan's largest drug maker, will acquire Millennium Pharmaceuticals(MLNM Quote) in an almost $9 billion transaction that significantly expands its presence in the United States, the companies announced Thursday morning.

The deal is the largest overseas acquisition by a Japanese drug maker.

Takeda will pay $25 a share in cash for Millennium, which is based in Cambridge, Mass. The price represents a 53% premium to Millennium's closing price of $16.35 a share Wednesday. The total value of the deal is $8.8 billion, which Takeda will finance through cash on hand.

Millennium's biggest drug is Velcade, a cancer drug used primarily to treat patients with multiple myeloma. In conjunction with the acquisition, Millennium pre-announced first-quarter Velcade U.S. sales of $83.5 million, a 13% increase over fourth-quarter 2007 sales and a 42% increase year over year.

In Europe, Velcade is marketed by Johnson & Johnson(JNJ Quote), with Millennium receiving royalties on those sales.

Velcade competes primarily with Celgene's(CELG Quote) Revlimid for market share amongst multiple myeloma patients. The two drugs have recently stepped up their competitive battle for use amongst newly diagnosed, or front-line, multiple myeloma patients.

Takeda's acquisition of Millennium is just one of several bold moves made by the Japanese drug maker recently. The company ended its U.S. joint venture with Abbott Labs(ABT Quote) and acquired Japanese rights to more than a dozen early-stage drugs in Amgen's(AMGN Quote) pipeline. Takeda also signed a worldwide partnership with Cell Genesys(CEGE Quote) for that company's experimental prostate cancer vaccine.

For Millennium, the Takeda takeover ends what has been a decidedly mixed run as an independent bio-pharmaceutical company. Back in the late 1990s Millennium was at the vanguard of the so-called genomics revolution, which promised to turn genetic information into new drugs faster than ever before.

Millennium's stock price rode the genomics bubble to all-time highs in 2000, but the promised scientific breakthroughs never came and the company's stock price fell steadily back to earth. Millennium's internal drug development pipeline never delivered on its potential and the company saddled itself with a bloated expense ledger. Velcade, the company's most successful drug to date, was acquired from an outside company.

But Millennium did manage to start turning the company around in 2006 and 2007 by sharply reducing costs and better managing its drug development pipeline. Last year, new clinical data supporting the use of Velcade in first-line multiple myeloma patients helped boost the company's outlook and its share price.

Under Takeda's ownership, Millennium will continue to be based in Cambridge, operating as a standalone business unit run by current CEO Deborah Dunsire.