UPDATE 1-OSI shares up ahead of deadline, higher bid seen

(Adds analyst’s comments; updates stock price)

PHILADELPHIA, May 14 (BestGrowthStock) – Shares of OSI
Pharmaceuticals Inc (OSIP.O: ), the target of a $3.5 billion
takeover offer from Astellas Pharma Inc (4503.T: ), rose more
than 3 percent on Friday as investors expected the Japanese
drugmaker to raise its offer.

Bids for Melville, New York-based OSI are due later on
Friday, a source familiar with the situation said. It was
unclear whether OSI would attract suitors besides Astellas.

Shares of OSI gained $1.90, or 3.32 percent, to $59.16 in
Nasdaq trading.

OSI has traded well above the $52 per share offered by
Astellas as investors expect either a higher price from
Astellas or another suitor, based on valuations for other
biotech deals and the potential for the wider use of its
blockbuster drug, Tarceva.

“The expectation all along has been that this gets done
between $57 and $60 a share and now the market is betting it’s
closer to $60,” said one arbitrageur who declined to be named
because he was not authorized to speak to the media.

In March, Astellas said it would get a partial look at the
financial records of OSI. In exchange, Astellas agreed to a
standstill pact under which it would not acquire any shares of
OSI until a May 15 deadline. Astellas’ tender offer for OSI
expires on May 17.

“Astellas’ $52 (per share) offer may be too cheap …
leading us to believe this deal should be executed around the
mid- to high-$50s, where the stock trades now,” said Canaccord
analyst George Farmer.

If Astellas fails to commit to a higher offer and walks
away, shares of OSI would “plummet into the $40s since no third
party has materialized,” Farmer said.

OSI could not be immediately reached for comment. Astellas
declined to comment.

Stock Market Today

(Reporting by Jessica Hall; Editing by Derek Caney and Steve
Orlofsky)
(For more M&A news and our DealZone blog, go to
http://www.reuters.com/investing/news/mergers)

UPDATE 1-OSI shares up ahead of deadline, higher bid seen