Mitsubishi to buy Tanabe in $4.3B deal, to create Japan's fourth-largest drugmaker

Having last month confirmed that they were exploring a merger (Marketletter January 29), Otsuka, Japan-headquartered Mitsubishi Pharma Corp (MCP; a subsidiary of the country's largest chemicals group, Mitsubishi Chemical) and Tanabe Seiyaku have signed a deal to move forward in this direction.

Specifically, Mitsubishi will acquire Tanabe for 523.0 billion yen ($4.29 billion) and will own a majority of the combined group after Tanabe sells 69 of its shares for every 100 held. The new company will be called Mitsubishi Tanabe Pharma Corp and the deal, which is expected to close on October 1, is forecast to create Japan's fourth-largest pharmaceutical group. Natsuiki Hayama, president of Tanabe, and Takeshi Komine, president of Mitsubishi Pharma, will become president and vice president, respectively, of the new firm.

Speaking at press conference to announce the merger after the close of stock markets on February 2, Mr Hayama explained the goals of the new firm are to increase combined pro forma 2005 sales (including over-the-counter and other products) of 407.8 billion to 470.8 billion for 2010, lift the current 78.4 billion yen R&D budget to 85.0 billion yen and raise the 63.8 billion yen operating profit to 105.0 billion yen by 2010.