Icahn to Boost ImClone Stake

Shares of ImClone Systems (IMCL - Cramer's Take - Stockpickr) advanced after hours following the company's announcement that corporate raider Carl C. Icahn plans to increase his holdings.

If he buys the maximum amount permitted by the Federal Trade Commission, he could become the biggest shareholder of the New York biotechnology concern.

ImClone's stock jumped $1.79, or 5.9%, to $31.95 in after-hours trading.

Icahn's plans aren't completely clear because the ImClone announcement only says that he has received clearance from the Federal Trade Commission to purchase between $100 million and $500 million in ImClone stock, "when taken in the aggregate with shares already held, of ImClone Systems' common stock." The announcement was made after markets had closed.

But even the $100 million purchase amount would make him the largest shareholder aside from Bristol-Myers Squibb (BMY - Cramer's Take - Stockpickr). By virtue of its agreement with ImClone to develop and sell the cancer drug Erbitux, Bristol-Myers Squibb owns 14.4 million shares, or 17.3% of the common shares.

As of March 31, Icahn owned just under 5 million shares, or 6%, of ImClone's common stock. Based on Tuesday's closing price of $30.16 a share, a $100 million purchase would add about 3.32 million shares for a total of 8.32 million shares. The largest institutional shareholder as of March 31 is Massachusetts Financial Services Co. with 7.05 million shares.

And if Icahn bought $500 million worth of ImClone's stock, he'd be entering potential takeover territory because he'd have about 16.58 million shares, or 19.8% of ImClone's stock.

Icahn has been buying and selling ImClone's stock for several years. He had been buying shares recently; but in June 2004, he cut his stake to 4.8%, down from 6.9% in March 2004.

Separately, ImClone reported that it had withdrawn a stock incentive plan from consideration at the company's annual meeting on June 15, saying it will "consider and discuss alternative incentive compensation plans" with shareholders.