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 Otsuka said subsidiary Otsuka Pharmaceutical Co Ltd would pay $17
per share in cash, or a premium of 13.3 percent to Avanir's closing
price on Monday.
The deal, Otsuka's biggest according to Thomson Reuters data, comes
as the company aims to beef up its product pipeline ahead of a
so-called "patent cliff" after April 2015, when its U.S. patent for
schizophrenia drug Abilify expires and opens the way to generic
competition.
Its global sales of Abilify totaled 575.7 billion yen ($5 billion)
in the last fiscal year, around 40 percent of the total for Otsuka
Holdings. The United States is the biggest market for the drug.
Japanese companies, helped by cash-rich balance sheets and
encouraged by an ageing domestic population, are looking overseas
for growth.
Otsuka will launch a tender offer within 10 business days to
purchase all outstanding shares of Avanir, the companies said. The
deal is expected to close in the first quarter of 2015.
Otsuka Pharmaceutical President Taro Iwamoto said the deal would
"bring together Otsuka's experience and business track record in the
area of mental illnesses with Avanir's strengths in neurologic
diseases", according to a statement.
Avanir developed Nuedexta, which treats pseudobulbar affect, a
neurological disorder characterized by involuntary outbursts of
crying or laughter.
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But it failed to win approval from the U.S. Food and Drug
Administration for a migraine drug device in November, a few weeks
after the regulator had raised questions regarding some data
submitted as part of the marketing application.
After the deal, Avanir will operate as a unit of Otsuka America Inc
and will partner with Otsuka to enhance its development and
marketing efforts in central nervous system-related disorders.
Goldman Sachs advised Otsuka, while Centerview Partners advised
Avanir.
(1 US dollar = 118.8800 Japanese yen)
(Reporting by Ritsuko Ando in Tokyo and Neha Dimri in Bengaluru;
Editing by Gopakumar Warrier and Jane Baird)
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