(China Daily)
Updated: 2008-02-14 07:20

Fujifilm Holdings Corp agreed to buy Toyama Chemical Co for as much as 154.6 billion yen ($1.4 billion), adding a potential bird-flu treatment to its medical unit as digital camera sales slow.

Toyama shareholders will receive 880 yen a share, 39 percent higher than Tueday's closing price, the Tokyo-based companies said in a statement yesterday. Fujifilm's largest takeover since 2001 will also include the purchase of new shares.

The acquisition would give Fujifilm about 10 experimental medicines, including the first new class of anti-flu drug in a decade. The deal may provide Toyama researchers with funds to discover new drugs after the company posted its biggest annual loss in at least 12 years.

"This is a great buy for Fujifilm," said Hiromichi Tsuyukubo, who helps manage about $800 million including Toyama shares at Myojo Asset Management Japan Co in Tokyo. "Toyama is well placed if avian flu breaks out. Their drug could be worth $600 million."

Shares of Toyama Chemical surged by the daily maximum or 16 percent to 731 yen on the Tokyo Stock Exchange yesterday. Fujifilm fell 1.5 percent to 3,890 yen.

Fujifilm offered to buy as many as 153.1 million Toyama shares and spend 19.8 billion yen to purchase new Toyama stock by the end of February to own a 66 percent stake. Taisho Pharmaceutical Co, Toyama's largest shareholder, will also buy new shares, raising its holding to 34 percent.

Paying 154.6 billion yen would make the acquisition Fujifilm's largest since it bought control of a copier and printer venture from partner Xerox Corp for 160 billion yen in 2001, according to data compiled by Bloomberg data.

The drug and medical equipment market has attracted camera makers that are facing slower sales. Japan's Camera & Imaging Products Association last month said camera shipments worldwide will rise 12 percent this year after climbing 27 percent in 2007.

Fujifilm, founded in 1934 under a government initiative to establish a film manufacturing industry, bought a radio-isotope unit from Daiichi Sankyo Co in September 2006, and Olympus Corp, Japan's third-largest maker of digital cameras, in November agreed to buy Gyrus Group Plc a maker of surgical tools. Hoya Corp, the nation's largest maker of optical glass, acquired Pentax Corp last year to access Pentax's medical- equipment business.

Fujifilm President Shigetaka Komori said at a press conference the company aims to achieve triple medical sales to 1 trillion yen in about 10 years. Before yesterday's announcement the company had said it plans to raise medical sales to 300 billion yen in the year March 31, 2009.

Information solutions was the company's fastest growing division in the nine months ended December 31, led by a 12 percent gain in medical sales, according to Fujifilm.

Toyama began recruiting patients in Japan last month to test whether its anti-flu pill, known as T-705, is more effective at reducing flu symptoms than Roche Holding AG's Tamiflu and GlaxoSmithKline Plc's Relenza antivirals. The experimental medicine is in the second of three stages of clinical studies in Japan and in the first stage in the US.

If successful, T-705 could give doctors a new treatment for an infectious disease that the World Health Organization estimates causes between 250,000 and 500,000 deaths worldwide each year. Toyama said it may also help people infected with the strain of bird flu that doctors say may spark a global pandemic.

Credit Suisse Group advised Toyama and Nomura Holdings Inc advised Fujifilm on the deal, according to the statement.

Agencies