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ImClone ponders bid, rejects Bristol's

September 11, 2008|From the Associated Press

Biotechnology company ImClone Systems Inc. said Wednesday that it was considering a buyout offer worth $70 a share from an unidentified large pharmaceutical company, and it rejected a $60-per-share bid from partner Bristol-Myers Squibb Co.

ImClone said Chairman Carl Icahn has been in talks with the chief executive of the pharmaceutical company that made the new offer, which would be worth about $6.1 billion. ImClone's board will allow the potential buyer two weeks to do due diligence. ImClone said it had not decided whether the offer was adequate.

The new offer would be a premium of 10% to ImClone's closing price Tuesday of $63.65. On Wednesday, ImClone shares jumped $4.29 to $67.94.

In August, ImClone said the Bristol-Myers offer of $4.5 billion on July 31 undervalued the company, and billionaire investor Icahn was said to be opposed to it. On Wednesday, ImClone formally rejected that offer from Bristol-Myers, its partner in selling the colon- and head-and-neck cancer drug Erbitux. Both firms as based in New York.

"In our view, this will force [Bristol-Myers'] hand to offer $70 with no due diligence conditions immediately," Deutsche Bank analyst Barbara Ryan wrote in a note to clients.

She said the "best guess" is that Bristol will eventually acquire ImClone for $70 a share, which she called "a good strategic and financial deal" for Bristol-Myers.

Other analysts also said that's a likely outcome but that plenty of other major drug makers -- nearly all of which are struggling to find new medicines to sell and have considerable cash on hand -- would like to buy ImClone.

Analysts said potential buyers could include Sanofi-Aventis, GlaxoSmithKline and AstraZeneca.

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