- The Washington Times - Friday, August 1, 2008

TRENTON, N.J. | Bristol-Myers Squibb Co. on Thursday offered $4.5 billion in cash for its cancer drug partner, biotechnology company ImClone Systems Inc., saying the two are “a natural fit.”

The proposal offers ImClone stockholders $60 per share, a 30 percent premium to the company’s closing price of $46.44 Wednesday. Bristol-Myers, the world’s No. 14 drugmaker by revenue, already owns about 17 percent of ImClone.

The two New York companies have been partners since September 2001 in developing Erbitux, which is approved for treating advanced colorectal cancer and head and neck cancers.

ImClone said Thursday that it is “currently studying the situation.”

ImClone shares surged beyond Bristol’s offering price and rose $17.49, or 37.7 percent, to $63.93. Bristol-Myers shares fell 39 cents to $21.12.

Bristol-Myers Chairman and Chief Executive James M. Cornelius told reporters during a conference call that the deal is a fair offer and is meant to build value for shareholders by getting approvals to sell Erbitux for other types of cancer and helping ImClone turn its cancer compounds into new drugs.

“It is consistent with our strategy to focus on specialty areas of high unmet need,” Mr. Cornelius said. “This will benefit cancer patients worldwide.”

Analyst Steve Brozak of WBB Securities said Bristol-Myers is “buying earnings” with the deal because, like the other big drug makers, it has no blockbusters in development. ImClone revenue would go right to Bristol’s bottom line, he said, and jobs in administration and other areas likely would be cut.

“This deal was a foregone conclusion years ago,” he said.

Deals like this will become common, Mr. Brozak predicted.

Just last week, No. 7 drugmaker Roche Group offered $43.7 billion for the 44 percent of biotech drugmaker Genentech Inc. it doesn’t already own.

Mr. Cornelius said if the purchase goes through, Bristol-Myers should still be able to make more deals, and if it doesn’t, “then we simply move on to the next one on the list.”

Carl Icahn, a billionaire activist investor, won control of ImClone in 2006 after a proxy battle that led to the departure of CEO Joseph L. Fischer and four board members. He was named chairman and created an executive committee to lead the company. John H. Johnson was named CEO in August of 2007.

At the time of the takeover, Mr. Icahn said he planned to investigate why ImClone’s relationship with Bristol-Myers had “seriously deteriorated” following a public feud over Erbitux.

“Our relationship has blossomed since he took over,” Mr. Cornelius said, and North American Erbitux sales increased almost 20 percent last year.

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