OSI Pharmaceuticals agrees to buy Eyetech for $935 million in cash and stock

Monday, August 22nd 2005, 9:53 am
By: News On 6

NEW YORK (AP) _ OSI Pharmaceuticals Inc., which focuses on cancer treatments, has agreed to purchase Eyetech Pharmaceuticals Inc. for about $935 million in stock and cash.

Eyetech makes the age-related macular degeneration treatment Macugen, which it sells along with marketing partner Pfizer Inc.

Eyetech shares rose $4.50, or 32.2 percent, to $18.49 in premarket trading in Monday while OSI shares fell $4.07, or 10 percent, to $36.70.

In an announcement Sunday night, OSI said it had offered to buy Eyetech for $20 per share, or at a 43 percent premium to its Friday close of $13.99. It said 75 percent of the purchase price would be paid in cash and the remaining 25 percent in stock through an exchange of 0.12275 OSI shares for each share of Eyetech.

OSI said it will issue about 5.7 million OSI shares for the transaction. OSI currently has about 51.4 million shares outstanding. Eyetech has about 43.2 million shares outstanding.

The transaction, which is subject to regulatory and shareholder approval, is expected to close by the end of the year.

Combined, the companies forecast more than $600 million in revenues for 2006, with annual growth in the mid-teens over the next five years. Both companies are based in New York.

OSI said it expects the transaction to add to earnings for the next four years beginning in 2006. Analysts surveyed by Thomson Financial expect a loss per share from OSI of 21 cents in 2006 and a profit of per share of 86 cents in 2007. Analysts are expecting Eyetech to earn 96 cents in 2006 and 89 cents per share in 2007.