INDIANAPOLIS — Eli Lilly’s winning bid of more than $6 billion for cancer-drug maker ImClone Systems means a billion-dollar payday for former rival bidder Bristol-Myers and vindication for corporate raider and ImClone chairman Carl Icahn.
Lilly said Monday it would pay $70 per share for New York-based ImClone. The acquisition, Lilly’s largest ever, helps the Indianapolis drugmaker prepare for looming patent expirations and builds “a true oncology powerhouse,” Lilly chief executive John Lechleiter said.
The deal also brings to an end one of the more dramatic buyout sagas in recent history.
Lilly’s bid topped two previous offers from Bristol-Myers Squibb Co., which partnered with ImClone to develop and market the blockbuster drug Erbitux. In July, New York-based Bristol offered $60 per share for the 83 percent of ImClone it doesn’t already own and later raised that bid to $62 per share.
But Bristol-Myers said in a statement Monday it would stop the bidding there. CEO James Cornelius, a former Lilly executive and board member, said his company was pleased to have started a process that led to a “substantial increase” in ImClone’s value.
Bristol-Myers stands to pocket about $1 billion for its 14 million ImClone shares while still sharing in the revenue from Erbitux. The drugmaker gets 61 percent of the North American revenue from Erbitux.
Icahn, who became ImClone’s chairman two years ago, had called Bristol’s $62 offer “absurd” last month and said the biotech company had another suitor, which he wouldn’t name.
“ImClone’s pipeline is poised to mature in the years most critical for Lilly,” Lechleiter said.
Lilly spokesman Mark Taylor said $6.5 billion is the estimated gross cost of the transaction. That figure assumes a fully diluted share base, including stock options that vest. It does not include ImClone debt or cash on hand.
Both boards have approved the deal and recommended that ImClone stockholders tender their shares.
Lilly plans to pay for the deal with a combination of cash and up to $3 billion in debt.
Chief financial officer Derica Rice told analysts Lilly secured an additional $4 billion in financing to backstop the deal.
Who gets what
Impact of Eli Lilly’s $70-per-share offer for ImClone Systems:
Lilly: Boosts its cancer-drug portfolio, which already contains the drugs Alimta and Gemzar, by gaining access to ImClone blockbuster Erbitux and some promising drugs in development.
Bristol-Myers Squibb: The former rival bidder could receive up to $1 billion for its 14 million ImClone shares.
ImClone: Chairman Carl Icahn gets nearly double the $36-per-share offer he opposed two years ago.
The Associated Press
