Bristol offers to buy ImClone for $60 a share

By Lewis Krauskopf

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.