Will CV Therapeutics Get A Higher Price From Astellas?

Analysts think so.


Tokyo-based pharma company Astellas Pharma offered $1 billion in cash or $16 a share for CV Therapeutics (CVTX), which makes small molecule cardiovascular drugs including angina treatment Ranexa. The deal is a 41 percent premium to CVTX's closing price, and shares promptly jumped today in expectation of a deal. Here's the recent history: Astellas made an identical offer in November, but CVTX's board rejected the deal. Now, by making the big public and asking CVTX to reconsider, analysts say the deal could happen and the price could rise.

Citigroup analysts say the second offer indicates Astellas is willing to negotiate a higher price, and call Ranexa is a "promising" drug with a possible market potential of $400 million. Unless another bidder emerges, Citi says, "we suspect it will be difficult for CVT's Board to thwart Astellas's aggressive overtures, and believe that a deal in the high teens to low $20s range is likely."

Also, similar sentiment comes from Eric Schmidt at Cowen (via Reuters): "I think in going public Astellas is being quite aggressive and suggests they would be willing to go to a higher price," said Eric Schmidt, an analyst at Cowen & Co. "The question is whether any other company will emerge to bid."

The drug sector is having a big week following Pfizer's $68 billion buy of rival Wyeth.

  • Kirk Shinkle

    Kirk Shinkle is a senior editor for U.S. News Money and manages the Best Funds portal. Follow him on Twitter @KirkS or email him at kshinkle@usnews.com.

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