Pharmaceuticals

Return to Article

Lilly Boosts Bid for Icos

Robert Steyer

Eli Lilly(LLY) raised its offer to acquire Icos(ICOS) by $2 a share to $34, taking the overall value of the deal to $2.3 billion.

Lilly called the bid its "best and final offer." The move will force a delay in a vote by Icos shareholders, which had been scheduled for Tuesday.

Instead, shareholders of the company that makes the impotence drug Cialis will vote on Jan. 25. Icos shareholders as of Dec. 26 will be eligible to vote. The boards of Icos and Lilly unanimously approved the new offer.

On Monday, Icos shares were up 50 cents, or 1.5%, to $33.85. Lilly's stock was down 76 cents, or 1.4%, to $53.75.

The two companies have a joint venture that sells Cialis in certain markets, and Lilly has said the takeover would reduce costs in the long run. The companies have been partners for eight years.

Lilly made its first bid in mid-October . But by later that month, Icos began trading over $32 and rose as high as $33.51. When a stock trades above a takeover bid, it often indicates that someone else might make a higher offer. However, it's doubtful another company would want to buy Icos, knowing that it would inherit the Lilly marketing agreement.

The most prominent objection to the deal has come from HealthCor Management LP, an investment management firm that now owns 6% if Icos shares. Although HealthCor isn't the biggest Icos investor, the firm sent a letter to Icos directors in mid-November saying Lilly should pay "well in excess" of $40 a share.

No other large shareholders have complained about the deal publicly, at least according to filings with the Securities and Exchange Commission. One independent proxy research firm supported the original deal, but another firm opposed it.

In another pharmaceutical industry takeover update Monday, the German drug and chemical conglomerate Merck KGaA said European Union antitrust regulators have approved its takeover of Swiss biotechnology company Serono(SRA). U.S. regulators cleared the deal Oct. 30.

Merck, which announced its offer in September, will pay $13.3 billion for the company whose biggest product is the multiple sclerosis drug Rebif.