Bristol-Myers Pays Up for ZymoGenetics

NEW YORK (TheStreet) --Bristol-Myers Squibb (BMY) Tuesday said it's agreed to acquire ZymoGenetics (ZGEN) for an eye-popping 84% premium.

The deal values shares of ZymoGenetics, a Seattle-based biotech whose products in development include a Hepatitis C treatment, at $9.75 each. The stock closed Tuesday's session at $5.30, and was down 14% so far in 2010 prior to the announcement. ZymoGenetics's stock hasn't traded above $10 since March 2008.

Overall, the transaction is worth about $885 million. Net of ZymoGenetics' cash, the aggregate value of the deal is $735 million.

Bristol-Myers said the acquisition has already received the unanimous approval of the boards of both companies, and that shareholders representing roughly 37% of ZymoGenetics's outstanding common stock have entered agreements to support the deal and tender their shares to the offer.

"The acquisition of ZymoGenetics brings us full ownership of a promising investigational biologic that strengthens our very diversified Hepatitis C portfolio. Building on our leadership in virology, we are developing a strong portfolio to help patients with Hepatitis C," said Lamberto Andreotti, Bristol-Myers CEO, in a statement. "In addition, ZymoGenetics brings proven capabilities with therapeutic proteins and revenue from a marketed specialty surgical biologic."

Bristol-Myers expects the deal to dilute earnings by 3 cents a share in fiscal 2010 and 7 cents a share in fiscal 2011.

On August 3, ZymoGenetics posted a loss of $3.8 million, or 4 cents a share, for the second quarter ended in June with revenue totaling $37.7 million, up from $22.6 million in the same period a year earlier.

In addition to pegylated-interferon lambda, ZymoGenetics's novel interferon in Phase IIb development for the treatment of Hepatitis C, the company's products also include Recothrom, a recombinant thrombin approved for use as a topical hemostat to control non-arterial bleeding, and a number of early clinical and pre-clinical oncology and immunoscience programs.

--Written by Michael Baron in New York.



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