Eisai’s $3.9 Billion Parachute: MGI Pharma

Eisai said this morning that it’s dropping $3.9 billion in cash to pick up MGI Pharma, a Minnesota-based company that sells cancer drugs.

Consider the deal a parachute for the company to wear when it falls off the patent cliff in 2010, as its biggest selling drug, the Alzheimer’s medicine Aricept, loses patent protection.

The Japanese drug business has been struggling — prompting the nation’s health ministry to declare a “crisis situation” this summer. At the same time, as population in Japan shrinks, companies there have been turning to acquisitions overseas for growth.

Last month, we noted that Olympus made a $1.9 billion bid for Gyrus, a U.K. maker of minimally invasive surgery gear. The Eisai-MGI deal is the largest-ever foreign acquisition by a Japanese pharma company, according to the WSJ.

MGI said late last month that it was putting itself up for sale. The Eisai deal comes at a 39% premium to where the stock was trading before MGI made that announcement. And the purchase price is 23% above the stock’s Friday close.

Photo by Commorancy via Flickr