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Japan’s Takeda Buys Ariad for $5.2 Billion

An Ariad Pharmaceuticals chemist working in the company’s lab.An Ariad Pharmaceuticals chemist working in the company’s lab.
The challenges to pharmaceutical innovation range far and wide.Photo by Barry Chin—The Boston Globe/Getty Images

Japan’s Takeda Pharmaceutical said on Monday it would buy cancer drug maker Ariad Pharmaceuticals in a deal valued at $5.20 billion, to beef up its oncology pipeline.

Ariad stock was up 74.7% at $23.98 in premarket trading.

Takeda has agreed to pay $24 in cash for each Ariad share, a premium of about 75% to its Friday close.

Ariad’s leukemia drug, Iclusig, which is expected to generate sales of $170 million-$180 million in 2016, came under fire in October for “staggering” price increases.

A U.S. Food and Drug Administration decision on its lung cancer treatment brigatinib, which is being touted as a potential blockbuster, is expected by April 29.

 

Cancer treatment is a target for many large drugmakers, with high prices being paid for promising assets, such as Medivation, which was bought by Pfizer Inc for $14 billion.

Takeda’s negotiations to acquire Valeant Pharmaceuticals International’s Salix stomach-drug business have stalled over price disagreements, Reuters reported in November, citing people familiar with the matter.

The Ariad deal, which Takeda plans to fund by taking on $4 billion in new debt as well as existing cash, is expected to close by the end of February.

Ariad had long-term debt of about $522 million as of Sept. 30, according to a regulatory filing.

The equity value of the deal, which is expected to add to Takeda earnings in 2018, is $4.66 billion, according to Reuters calculations.