Bristol-Myers Offers $4.5B For ImClone Systems
6 CommentsBy Ed Silverman // July 31st, 2008 // 8:45 am
The drugmaker, which owns 16.6 percent of ImClone, is offering to buy the rest of the company for $60 a share - which represents a 30 percent premium over ImClone’s closing stock price yesterday - in order to gain full control of the Erbitux cancer medication. The two companies, you may recall, already have a deal to jointly develop and promote the drug, which generated $1.3 billion in sales last year.
In a letter sent this morning, Bristol-Myers ceo Jim Cornelius writes to ImClone chairman Carl Icahn, who shook up the drugmaker’s management after gaining control, that “a full combination of BMS and ImClone is a natural fit for both our companies, and we are convinced our proposed price represents a full and fair offer for ImClone.” The offer values ImClone at about $5.2 billion and, not surprisingly, ImClone shares jumped 44 percent in pre-market trading this morning.
Bruce
An interesting turn of events. But I wonder what the contract with Merck KGgA (Merck Serono) says about this.
Old Friend
This move is difficult to understand. Sales of Erbitux in the US are around $700M total 61% of which BMS already received. There were some good data at ASCO but that mainly came from Merck KGaA’s development group. Nothing from Imclone. Let’s say they grow this to a $1.5 B drug BMS would get that additional 39% they were paying Imclone or $600M/year. The patent expires in 2015. 7 years at $600 M = $4.2 B…or the purchase price.
I hope the rest of Imclone’s pipeline is worth it.
Rick
Does that headline say $4.5 M or $4.5 B? If it’s $4.5 M that’s a heck of a deal for BMS!
Ed Silverman
Hi Rick,
It’s a Summer Blowout! Well, what can I say? Now and then, I’m guilty of an eggregious typo, partly because I’m also the copy editor, which is to say I’m responsible for all content decisions myself.
Very sorry for the gaffe. And thanks for pointing it out.
Best
ed
Jeffrey Clark, CEO of Beaker.com - The Online Community for Life Sciences Professionals
Easy to see that the M&A train is barreling down the tracks at full steam. And one popular play these days is to buy out your partners. Own 20% of a company, grab the rest. Easier to negotiate a deal & acquire a known entity than to try & combine two wholly unique companies.
We have seen at least a half dozen of these deals in the past few weeks. If you evaluate the other potential combinations that fall into this category, perhaps we’ll see more.
Doc
Imclone will not go for $60, Ichan will never agree to that cheap. Perhaps Mr. Cornelius consulted with Peter Dolan, due to Peter’s expertise in this area from his outrageous overpayment for DuPont Pharma.