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Bristo-Myers Squibb Determined on ImClone Systems Inc. (IMCL) Takeover, Sweetens Bid
10/13/08
ticker(s):
IMCL,
sector(s):
Friday October 03 2008
Grabbing headlines in the pharmaceutical-biotech merger front, New York-based pharmaceuticals manufacturer Bristol-Myers announced it increased its offer for ImClone Systems Inc. to $62 a share in cash and will take the offer directly to shareholders of the New York oncology-drug specialist.
At the end of July, Bristol-Myers proposed the acquisition, which CEO James M. Cornelius considers an evolutionary development in the two companies’ seven-year relationship. Bristol-Myers and ImClone have worked on a very successful commercialization of Erbitux, an important cancer therapy that both companies hold exclusive long-term marketing rights. The proposed consolidation stirred interest, just like the several large pharmaceuticals that went on a biotech buying spree several months ahead. Words on pharma-biotech mergers and acquisitions dominated life sciences sector during first half of this year - with several companies foreseeing significant increase in market value through takeover deals.
As a biopharmaceutical company, ImClone develops a portfolio of targeted biologic treatments designed to address the medical needs of patients with cancer. The company focuses on two systems for treating cancer: growth factor blockers and angiogenesis inhibitors. Its commercially available product, Erbitux (Cetuximab), is an antibody approved by the United States Food and Drug Administration (FDA). On March 1, 2006, the FDA approved Erbitux for use in combination with radiation therapy for the treatment of locally or regionally advanced squamous cell carcinoma of the head and neck (SCCHN) and as a single agent in recurrent or metastatic SCCHN.
Also, ImClone has advanced a number of investigational agents to various stages of clinical development, including those targeting angiogenesis and growth signaling mechanisms, which can be used to treat various kinds of cancer and other diseases.
Earlier this month, ImClone rejected Bristol-Myer's $60 per share bid, saying the figure substantially undervalued the company. Imclone said it was eyeing a higher bid from an unnamed buyer - a potential $70 a share bid.
Bristol-Myers, which serves as U.S. marketer for the biotech group's only marketed product, currently owns approximately 16.6% of all outstanding shares of ImClone.
Just like an embattled suitor, Bristol-Myers raised its offer to $62 per share, valued at approximately $4.7 billion, and said it will take the offer directly to shareholders. Also, Bristol-Myers said it will launch a proxy fight for control of ImClone's board, which has been chaired by activist investor Carl Icahn since late 2006 following a protracted battle with management.
In a letter sent to ImClone's board Monday, Bristol-Myers stated that the new $4.7 billion transaction would let ImClone shareholders realize immediate liquidity on their investment at a substantial premium, while avoiding the significant regulatory and financial investment required to maximize the value of the company's undeveloped early stage clinical and preclinical compounds, which are not yet commercially viable.
Given the $62 a share proposal, Cowen analyst Eric Schmidt thinks IMCL chairman Carl Icahn is unlikely to agree, and says Bristol's persistence will only bolster his obstinance. The current rise in ImClone's shares prices signals investors' expectations for ImClone to get a better offer from Bristol-Myers, or a third buyer.
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| Stocks | Searches Today | ||
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| IMCL | (IMCLONE SYSTEMS) | Summary Messages Articles | 0 (new!) |
| BMY | (BRISTOL MYERS SQI) | Summary Messages Articles | 0 (new!) |
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