OT Enbrel, $16B for <$3B Revenue
NEW YORK (CNN/Money) - Amgen Inc. entered an agreement Monday to purchase Immunex Corp. for $16 billion in cash and stock, giving the world's largest biotech developer access to one of the fastest growing arthritis medications.
Under terms of the transaction, each Immunex share will be exchanged for 0.44 Amgen share, representing 85 percent of the acquisition, and $4.50 in cash, or about 15 percent of the purchase.
Amgen will also acquire the 41 percent of Immunex owned by American Home Products (AHP: Research, Estimates), for the same purchase price per share. American Home Products, which has already agreed to vote in favor of the transaction, will own about 8 percent of the combined company.
"This is compelling strategic transaction and an excellent opportunity for the shareholders, employees and partners of both companies, and we expect it will generate significant benefits for hundreds of thousands of patients around the world," said Amgen's chairman and chief executive, Kevin Sharer. "We firmly believe that, as a result of this combination, Enbrel -- the fastest growing biologic drug ever -- will reach its peak of $3 billion or more in annual sales."
The results for Enbrel, Immunex's rheumatoid arthritis treatment, have not been all positive however.
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In March, Immunex said it would halt testing of Enbrel in chronic heart failure patients because the drug did not prove effective in clinical trials. The company had theorized Enbrel's anti-inflammatory mechanism would help heart patients.
Immunex also said at the time that two mid-stage trials of its experimental asthma drug Nuvance showed no apparent benefit in opening up lung airways. Immunex's stock plunged on the double dose of bad news.
Despite its past test results, analysts believe Amgen will benefit from the transaction. For Amgen, it would help offset heavy reliance on anti-anemia drug Epogen and immunity-booster Neupogen, both billion-dollar sellers.
And Immunex has few major drugs in development to augment Enbrel, said Peter Crowley, head of health-care investment banking at CIBC, who is not involved in the deal.
The biotech sector has seen a rash of acquisitions this month, with the acquirers buying mature companies with drugs that are either already on the market or will be soon.
Shares of Immunex (IMNX: Research, Estimates) rose $1.63 to $27.25 in before-hours trading Monday after falling $1.34 in Friday's regular session. Amgen (AMGN: Research, Estimates) shares gained 47 cents to $56.50 before hours trading after dipping $4.16 in Friday's regular session. |
