Today morning, Japanese pharmaceutical company Dainippon Sumitomo Pharma Co., Ltd. confirmed that it signed a definitive agreement to buy U.S. pharmaceutical company Sepracor Inc. (SEPR). The deal has been valued at $23 per share or $2.6 billion.

The market was abuzz with rumors yesterday regarding the potential takeover. The rumors led to a 26.46% increase in Sepracor’s stock price. Trading was halted in the afternoon with Sepracor shares closing at $22.80.

This acquisition is the latest in a series of deals conducted by Japanese companies that are looking to tap the U.S. pharmaceutical market – the biggest in the world. Last year, we saw four such deals take place including Eisai’s acquisition of MGI Pharma, Takeda’s acquisition of Millennium Pharma and Shionogi’s acquisition of Sciele. Finally, Daiichi-Sankyo acquired a stake in India’s Ranbaxy Labs.

Following the completion of the acquisition, Sepracor will become a wholly owned subsidiary of Dainippon Sumitomo Pharma America Holdings, Inc., and will continue its operations in the U.S. and Canada. The offer price of $23 represents a 48% premium to Sepracor’s average stock price over the last six month period ending Sept 1, and a 27.6% premium over the closing price on Sept 1. 

Meanwhile, Dainippon is looking to increase its penetration in the U.S. market through the Sepracor acquisition. The completion of this acquisition will give Dainippon access to Sepracor’s 1,200 person sales force, which should help support the launch of antipsychotic drug, lurasidone, currently in phase III development. Besides this, Sepracor will bring with it several marketed products like Lunesta, Xopenex/HFA, Brovana, Omnaris and Alvesco.

Once launched, lurasidone will be competing with schizophrenia drugs like AstraZeneca’s (AZN) Seroquel, Schering-Plough’s (SGP) Saphris, Eli Lilly’s (LLY) Zyprexa, and Bristol-Myers’ (BMY) Abilify among others.

The acquisition should not only help Dainippon develop its U.S. commercial structure but also strengthen its research & development (R&D) capabilities. Sepracor has several interesting candidates in its mid-stage central nervous system (CNS) pipeline, which should contribute to revenues from 2012.

The boards of both the companies have approved the deal. The tender offer, scheduled to commence no later than Sept 15 will close in the fourth quarter.

Read the full analyst report on “SEPR”
Read the full analyst report on “AZN”
Read the full analyst report on “SGP”
Read the full analyst report on “LLY”
Read the full analyst report on “BMY”
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