Under the plan, shareholders will say how many shares they want to tender and at which price within Amgen's range. Based on shareholders' tender offers, Amgen will determine the lowest price needed to buy a total of $5 billion in stock by Dec. 7. All shareholders will get the same price.
In the near term, the tender offer "is going to increase [upward] pressure on the stock," Silverblatt said. But after the tender is completed, the risk is that the upward pressure ends, he said.
Still, the $5-billion tender offer accounts for just half the $10 billion in total buybacks that Amgen's directors authorized last month.
Though the stock market cheered the tender offer announcement, credit rating firms Moody's Investors Service and Fitch Ratings were less enthused because of Amgen's decision to take on more debt.
Moody's cut its rating of Amgen to Baa1 from A3, while Fitch lowered its rating to BBB from A-. The new ratings still are investment grade, but are edging closer to what would be considered "junk" grades — Ba for Moody's and BB for Fitch.
Moody's said its decision was based on Amgen's "more aggressive financial policies, expected to result in a large increase in debt over the next several years."
The borrowing binge "diminishes the company's financial flexibility and credit quality from a bondholder's perspective," said Carol Levenson, research director for bond research firm Gimme Credit in Chicago.
Even so, she said, the new debt isn't enough "to raise Amgen's borrowing costs to the point where it negates the earnings-per-share benefit" of the buyback.
An Amgen spokeswoman said the company intended "to maintain a solid investment-grade credit rating."
Moody's noted that Amgen had almost $18 billion in cash on hand as of Sept. 30, offsetting its rising debt load.