Bristol offers to buy ImClone for $60 a share
NEW YORK (Reuters) - Bristol-Myers Squibb Co (BMY.N) has offered to buy ImClone Systems Inc IMCL.O for $60 a share, valuing its biotech partner at $5.2 billion in a deal to strengthen its grip on the fast-growing Erbitux cancer drug.
ImClone shares jumped 37.7 percent to $63.93 on Thursday, well above the offer price, reflecting the expectation that the company will command a higher offer.
"I think they may have to pay closer to a 50 percent premium," said Summer Street Research analyst Carol Werther. "ImClone has a superb pipeline, and I think you have to value that somehow."
The unsolicited offer, which represents a premium of roughly 30 percent over Wednesday's closing price, marks the latest in a spate of pharmaceutical-biotech deals, including Roche Holding AG's (ROG.VX) recent $43.7 billion bid for the part of Genentech Inc DNA.N it doesn't already own.
Drug makers have been eager to buy biotech assets to replenish dry pipelines as they endure patent expirations on their top medicines. Shares of other biotechnology companies with pharmaceutical partners, including Amylin Pharmaceuticals Inc (AMLN.O) and Onyx Pharmaceuticals (ONXX.O), rose sharply after news of Bristol's offer.
A buyout would be the latest twist in ImClone's colorful history. Stock trades in late 2001, based on insider news about Erbitux, landed ImClone's original CEO, Sam Waksal, and his friend Martha Stewart in jail.
According to a regulatory filing, Bristol Chief Executive James Cornelius made the offer to Carl Icahn, the billionaire investor who is also ImClone's chairman. Few investors expect Icahn to accept the bid as is.
ImClone said it had received the offer and was studying the situation. Icahn was not immediately available for comment.
MARRIAGE STAGE
Bristol said it would pay about $4.5 billion for the remaining 83.4 percent of ImClone it doesn't own.
It said the deal would help it cope with expected U.S. generic competition to its blockbuster blood-clot preventer Plavix, which could occur as soon as 2011.
"We've gotten through the dating stage. We're now at the marriage-proposal stage," Cornelius said in an interview. (For Cornelius interview, see nN31514560)
Sanford Bernstein analyst Tim Anderson said that buying ImClone would make Bristol "a more 'sellable' company itself by making Bristol a more robust cancer company."
Shares of New York-based Bristol fell 39 cents, or 1.8 percent, to close at $21.12 on the New York Stock Exchange.
A source familiar with the situation said Bristol would be "disciplined" in any discussions over price but also suggested that it may be open to negotiate the final price.
Morningstar analyst Karen Andersen said Icahn would probably test how far Bristol is willing to go for ImClone.
"It's hard to see who would be willing to offer a larger premium for ImClone than Bristol," Andersen said, "but the market is pushing up the shares because of Carl Icahn's history of getting a company sold at a price that he sets."
Bristol's Cornelius said its bid represents a "full and fair" offer.
If it does not acquire all of ImClone common stock, Bristol may sell its stake, according to the filing.
Bristol said the pending $4.1 billion sale of its Convatec wound-healing business would largely pay for the deal. It has also been preparing for the Plavix downturn by cutting $2.5 billion in cumulative company costs through 2012.
ERBITUX GROWTH
For nearly seven years, Bristol and ImClone have had a relationship centered on Erbitux, whose second-quarter global sales rose 33 percent to $423.3 million.
Bristol co-promotes Erbitux, which is approved for colorectal and head and neck cancer, in the United States, and Canada, while a recent approval for the drug in Japan and new lung cancer data are expected to drive sales.
Germany's Merck KGaA (MRCG.DE) has rights to Erbitux in other countries. Merck said the offer had no impact on its business with Erbitux and that there were no change of control clauses in its contract with ImClone regarding the drug.
"I think from Bristol's perspective they are trying to get ahead of potential positive events for ImClone that could push the value of ImClone's shares up by themselves," said Janney Montgomery Scott analyst Brian Rye.
Bristol said its financial advisers were Morgan Stanley, Citigroup and Credit Suisse.
(Additional reporting by Toni Clarke, Dane Hamilton, Jessica Hall and Ransdell Pierson, and Eva Kuehnen in Frankfurt; editing by Derek Caney and Lisa Von Ahn, Gary Hill)
