Amgen Inc. will announce today that it is acquiring biotechnology rival Immunex Corp. for slightly less than $29 a share in cash and stock, or about $16 billion, according to sources familiar with the deal.
The boards of Amgen, Immunex and American Home Products Corp., which owns 41% of Immunex, approved the deal late Sunday, sources said.
Under the terms of the agreement, Amgen and AHP will co-promote Enbrel, Immunex's blockbuster rheumatoid arthritis drug that is expected to have sales of $750 million this year. Enbrel is one of the best-selling biotechnology drugs and the crown jewel of the deal.
The deal will leave AHP with an 8% stake in Amgen, but AHP will sell those shares over the next couple of years, sources said. AHP will not have a seat on Amgen's board.
The deal is a coup for Amgen chief executive Kevin Sharer, who assumed the top spot at Amgen 18 months ago. Sharer, a former telecommunications executive, has been boldly remaking the conservatively run company, filling key executive positions with outsiders.
In Immunex, Sharer adds a third strong-selling drug to Amgen's portfolio, which includes EPO, an anti-anemia treatment and the world's best selling biotechnology drug. Amgen is based in Thousand Oaks.
Immunex CEO Edward Fritzky, 50, will retire when the deal is completed, probably in the third or fourth quarter of 2002. He stands to make as much as $100 million on the deal, if all his shares and options are converted. The remaining top executives of Seattle-based Immunex, including chief operating officer Peggy V. Philips, will be joining Amgen, a source said. Philips will become an executive vice president.
Wall Street has reacted negatively to a possible deal, in part because investors believe it will depress Amgen's earnings growth. But Amgen said the deal will dilute earnings by only 5% in 2003 and will contribute to earnings after that. Amgen last month forecast 20% earnings per share growth for the next five years.
On Friday, Amgen shares closed at $56.03 and Immunex closed at $25.62. Both trade on Nasdaq.