Banyu shares plunge on takeover
TOKYO, Japan (Reuters) -- Shares of Japan's Banyu Pharmaceutical Co Ltd tumbled on Thursday after industry sources said a group of shareholders that had opposed Merck & Co Inc's $1.5 billion agreed takeover of Banyu has admitted defeat and would tender their shares.
As of 0340 GMT, Banyu's stock was down 8.89 percent at 1,240 yen after sinking to a two-month low of 1,181 yen. It was the second-biggest percentage loser on the Tokyo bourse's main board.
Speculation that Merck would have to raise its current bid of 1,400 yen per share for the remaining 49 percent it does not own in Banyu had pushed the stock to a near-seven-month high of 1,413 yen last month. It has been trading near 1,400 since then.
"I think this is mostly profit-taking," said Takumi Yamagishi, senior analyst at Shinko Securities. "But I believe there were some investors that were hoping Merck would sweeten the deal and those hopes now appear to be gone."
A group of shareholders representing more than 20 percent of Banyu had written to the Japanese drug company last week demanding it reject Merck's offer as inadequate. But not all members of the group were prepared to block the deal by refusing to tender, people familiar with the situation told Reuters.
Shareholders have until March 6 to tender their shares and the offer is contingent on Merck getting at least 80 percent of Banyu's stock.
Despite the stock slide, analysts said the news was generally positive for Banyu and that shareholders should jump at the bid, especially since Banyu is facing a tough business environment.
Banyu said on February 21 that it would delay seeking government approval for Rofecoxib, a promising anti-inflammatory drug known as Vioxx in the United States and a mainstay product of Merck, as it needs to collect more clinical data.
"I officially recommend people to tender their shares because I believe that if the TOB (takeover bid) fails the share price is likely to fall back to about 1,000 yen in the short-term," said Philip Hall, analyst at Credit Suisse First Boston.
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