ImClone Gets $6.1 Billion Bid From Undisclosed Suitor

ImClone Gets $6.1 Billion Bid From Undisclosed Suitor

Sept. 10 (Bloomberg) -- ImClone Systems Inc. received a $6.1 billion takeover offer from a ``large pharmaceutical company'' that topped Bristol-Myers Squibb Co.'s unsolicited bid, ImClone Chairman Carl Icahn said.

The company making the $70-a-share bid wasn't identified. ImClone at the same time rejected the $60-a-share proposal from Bristol-Myers as inadequate, Icahn said today in a statement. ImClone shares rose as much as 8.2 percent, not reaching the level of the latest offer.

The new offer follows ``several conversations with the chief executive officer of a large pharmaceutical company,'' according to the statement. Bristol-Myers already owns 17 percent of ImClone, and the companies share profits of the cancer drug Erbitux, which generated $1.3 billion in sales last year. Germany's Merck KGaA sells Erbitux outside the U.S.

``This is Carl Icahn making it very clear this is where he thinks the bidding should start at,'' said Michael King, an analyst for Rodman & Renshaw, in a telephone interview today.

ImClone rose $4.63, or 7.3 percent, to $68.28 at 11:29 a.m. in Nasdaq Stock Market composite trading, after climbing to $68.89, less than the latest offer and suggesting that investors don't expect a better bid. Bristol-Myers dropped 40 cents, or 1.8 percent, to $21.64. Both companies are based in New York.

Phyllis Carter of Merck KGaA and Brian Henry of Bristol- Myers declined to comment. ImClone didn't immediately return a telephone call.

Price Uncertainty

``The stock is trading below the deal price because we're all still cogitating as to who the potential acquirer could be and how much they'd be willing to pay,'' said Caroline Stewart, an analyst for Piper Jaffray, in a telephone interview today. ``Bristol was obvious because they'd get 100 percent of Erbitux profits.''

Icahn's Icahn Associates is the second-largest holder, at 13 percent as of June 30, according to Bloomberg data. Bristol- Myers offered $4.3 billion for the rest of Bristol-Myers on July 31, a bid that Icahn last month described as too low. The $6.1 billion is based on all outstanding shares, which totaled 87 million as of Aug. 1.

ImClone said it hasn't determined whether the offer is enough.

``It's hard for Bristol to move to $70 and have not told us,'' said David Heupel, a portfolio manager for Thrivent Financial for Lutherans, in a telephone interview today. ``I'd be inclined to think that if Bristol really wants it, $70 won't be enough. It'll probably take another $5 to get the transaction closed.''

Cancer Pipeline

ImClone is also developing five experimental drugs for cancer. One of those, IMC-11F8, may compete with Erbitux, and Bristol-Myers may not have rights to market the drug under current agreements, Icahn said in an August statement. At the time, Icahn said the company may split itself to boost its value, separating out Erbitux.

Bristol's offer followed Roche Holding AG's $43.7 billion bid on July 21 to buy all of Genentech Inc. as big drugmakers seek to boost profits and gain new products from biotechnology partners. Genentech rejected the offer as too low.

``Certainly this isn't going to hurt Genentech,'' Heupel said after ImClone's disclosure of $70-a-share offer. ``When a peer has seen an evaluation kick up like this, it changes the competitive landscape.''

ImClone and Bristol-Myers are testing Erbitux, currently approved to treat head and neck tumors as well as colon malignancies, for use in lung and cancer tumor types to expand its application.

Cancer medicines are the best-selling and fastest-growing major class of drugs in the U.S., and sales will surge 12 to 15 percent each year to top $75 billion by 2012, according to IMS Health Inc., a pharmaceutical industry research company in Norwalk, Connecticut.

BLOOMBERG