<<By Arindam Nag and Dane Hamilton
NEW YORK, Dec 14 (Reuters) - Amgen Inc., the world's largest biotechnology company, is in advanced negotiations to buy Immunex Corp, a leading arthritis drug maker, for about $18 billion, sources familiar with the talks said late Thursday.
The deal, the biggest in the healthcare industry this year, would combine two of the world's most successful biotechnology companies at a time of intensified merger activity in the U.S. biotechnology industry.
Amgen would pay around $32 for each Immunex share, which closed on the Nasdaq stock exchange on Thursday at $26.96, the sources told Reuters. It would pay 15 percent of the deal value, about $2.7 billion, in cash and the remainder in shares.
The offer price would represent a premium of about 31 percent over Immunex's Wednesday closing share price of $24.45, before the stock jumped 10.27 percent on Thursday on speculation of a deal. Amgen dropped 6.52 percent to $60.19.
Amgen aims to announce the takeover early next week, but the sources warned the deal could still fall apart.
American Home Products Corp (NYSE:AHP - news), which owns a 41-percent stake in Immunex in 1994 has agreed ``in principle'' to the deal, the sources said.
After the deal, American Home would end up with about an eight percent stake in the enlarged Amgen.
All three companies declined to comment.
Kevin Sharer, chairman and chief executive of Amgen, would head the combined group, sources said.
The deal would bring together Amgen, best known for blood-building drugs Epogen and Neupogen, with Immunex, which which has built itself around Enbrel, a top-selling treatment for rheumatoid arthritis.
Enbrel generated sales of $545.6 million in the first nine months of 2001, a 19-percent rise over a year earlier.
The deal would also create an $85 billion biotechnology behemoth which would have research strength an financial muscle to buy more drugs in late-stage development from other pharmaceutical and biotechnology companies.
ANALYSTS SCEPTICAL
Speculation of a deal between Thousand Oaks, California-based Amgen and Seattle-based Immunex was greeted with scepticism in the market on Thursday, with some saying that Amgen would be financially stretched to do a deal. The company has about $2.5 billion in cash and liquid assets, analysts said.
``I think Immunex and Amgen will make a good fit, but the price is too high for Amgen to handle,'' said David Saks of the Saks MedScience Fund at Ladenburg Thalmann.
Talks between the two companies come amid intensified consolidation in the biotechnology sector as leading companies look to expand their product portfolios and become full-fledged pharmaceutical companies.
In this month alone Millennium Pharmaceuticals Inc. agreed to buy Cor Therapeutics Inc. for $2 billion in stock and MedImmune Inc. announced a $1.3 billion deal to buy Aviron.
But some analysts questioned the merits of a deal between Amgen and Immunex.
``It seems improbable to me. There are questions about what would happen to the marketing rights for Enbrel,'' said Dennis Harp, an analyst at Deutsche Banc Alex. Brown.
He noted that domestic rights to Enbrel, which is expected to see sales of about $750 million this year, are shared by Immunex and American Home, while American Home controls the overseas rights.
While analysts see some obvious synergies in combining the marketing forces of Enbrel with Amgen's rheumatoid arthritis drug Kineret, they fear the deal may dilute Amgen's immediate earnings.
``The deal would be very dilutive to Amgen. They just committed themselves to 20-percent earnings growth over the next five years,'' said Fariba Ghodsian, an analyst at Roth Capital Partners, noting that Immunex is expected to see flat growth through next year.
One of Amgen's major challenges would be to sort out Immunex's manufacturing facilities which have not been able to cope with demand for Enbrel.
Work on Enbrel initially started as a potential treatment for congestive heart failure but studies this year did not show its effectiveness in this area.
But apart from rheumatoid arthritis, Immunex is also working on selling it as a treatment for psoriatic arthritis.
Founded 20 years ago by scientists Steven Gillis and Christopher Henney and businessman Stephen Duzan, Immunex has over the years focused on studies on the human immune system.
In 1984, a year after the company went public, Immunex cloned the world's first immune system gene.
Apart from Enbrel, the company has two more completed products, Leukine, a treatment for leukaemia derived from yeast and Novantrone, a treatment for cancer.
The company is also developing an asthma treatment, Nuvance and another cancer drug, ABX-EGF, in collaboration with Abgenix Inc.
(Additional reporting by Deena Beasley in Los Angeles and Ed Tobin in New York)>> |
