Astellas takes CV offer hostile; Agrium considered stronger suitor in bid for CF Industries

By Cristal Cody

Tupelo, Miss., Feb. 27 - Tokyo-based Astellas Pharma Inc. defied analyst predictions and went hostile on Friday in its offer for CV Therapeutics Inc.

Calgary, Alta.-based agricultural product supplier and producer Agrium Inc.'s $72.00-a-share cash-and-stock offer for Deerfield, Ill.-based CF Industries Holdings Inc. is more likely to go through instead of CF Industries' hostile offer for Terra Industries Inc., an analyst said Friday.

Moving to Wall Street, the markets ended the week on a down note.

The Dow Jones Industrial Average lost 119.15 points, or 1.66%, to close at 7,062.93.

The Standard & Poor's 500 index dropped 17.74 points, or 2.36%, to 735.09, and the Nasdaq Composite index fell by 13.63 points, or 0.98%, to close at 1,377.84.

Astellas goes to court

Astellas launched its $16.00-a-share hostile tender offer on Friday and said later in the day that it also filed a lawsuit in Delaware against CV Therapeutics, but its bite may be mostly bark, an analyst said Friday.

Astellas is seeking an injunction against CV Therapeutics' stockholder's rights plan, which was extended last month through 2010.

"While we continue to prefer to reach a negotiated agreement with CV Therapeutics' board, their refusal to engage with us regarding our proposal has left us with no alternative but to take our offer directly to CV Therapeutics' stockholders," Astellas said in a statement.

The $1.1 billion offer is a 41% premium to CV Therapeutics' stock closing price on Jan. 26, the day before the offer was made public.

The tender offer expires March 27.

Palo Alto, Calif.-based CV Therapeutics advised shareholders on Friday to take no action on the offer.

The board said it will advise investors of a decision within 10 business days.

Astellas' bid is conditioned on several factors, including approval from CV Therapeutics' board of directors and the company keeping assets related to its angina drug, Ranexa.

CV Therapeutics is a partner with Astellas in the sale of the agent Lexiscan, which is used for coronary stress tests.

"They already have a partnership on Lexicon and they believe they can do a good job with Ranexa on their sales force," Mark Monane, an analyst with Needham & Co., told Prospect News.

"It kinds of makes sense because Astellas already has a partnership in CV Therapeutics so you can see where this idea came from," he said. "There's growth potential at CV."

Another analyst said Friday that CV Therapeutics' board probably would accept an offer of $18.00 a share, but a continued hostile stance by Astellas is unlikely.

"We believe that the hostile bid by Astellas, a Japanese company, puts significant pressure on the company to complete its offer for CV Therapeutics," the analyst said. "In our view Astellas' bid will be heavily scrutinized in Japan, where the corporate culture has historically viewed hostile situations with aversion. In our view, a negotiated solution is more likely given CV's poison pills, staggered board, and the CV-Astellas standstill agreement."

Shares of CV Therapeutics added 14 cents, or 0.88%, to close Friday at $16.00.

Agrium's superior bid

Agrium made its surprise offer on Wednesday for CF Industries.

The deal is valued at $3.6 billion and includes $31.70 in cash and one share of Agrium for each share of CF Industries.

Agrium's proposal is conditioned on CF Industries' termination of its bid for Sioux City, Iowa-based Terra Industries.

CF Industries had launched its tender offer for Terra on Monday for 0.4235 of a share of CF Industries for each share of Terra Industries.

"Agrium's track record in acquisitions shows that it is willing to aggressively pursue targets and will increase the offer if necessary," an analyst said Friday. "CF faces considerable difficulty in completing its offer for Terra. Besides facing tough Maryland antitrust protection, CF shareholders will need to approve the offer for Terra."

CF Industries said in a statement earlier in the week that the board will evaluate the offer.

Shares of CF Industries jumped $1.58, or 2.52%, to close Friday at $64.33.

Terra's stock gained $1.19, or 4.84%, to close at $25.79.

Shares of Agrium fell 11 cents, or 0.32%, to close at $34.78.

Terra Industries makes nitrogen products, and CF Industries Holdings is the holding company for CF Industries, Inc., a producer and distributor of nitrogen and phosphate fertilizer products.

Mentioned in this article:

Agrium Inc. NYSE: AGU

Astellas Pharma Inc. Pink Sheets: ALPMY

CF Industries Holdings Inc. NYSE: CF

CV Therapeutics Inc. Nasdaq: CVTX

Terra Industries Inc. NYSE: TRA

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