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Onyx Pharma Is For Sale, for North of $10B

Updated with stock prices.

SOUTH SAN FRANCISCO (TheStreet) -- Onyx Pharmaceuticals (ONXX) is in play now that Amgen's (AMGN) $10 billion offer has been rejected as too low, so how much will it cost Amgen or another suitor to acquire the company?

Amgen's initial offer of $120 per share in cash was a 38 percent premium to Onyx's closing stock price of $86.82 on Friday. Onyx rejected the offer Sunday, saying it "significantly undervalued" the company, but also said it would seek out competitive offers from interested suitors.

Onyx is worth about $110 per share as a standalone company today, but if a competitive bidding situation ensues, the company could be acquired for as much as $148 per share, Deutsche Bank analyst Robyn Karnauskas said in a research note published Sunday.

Onyx shares opened Monday trading up 51% to $131.

It's common for initial takeout offers to be raised over time. Sanofi (SNY) first bid $69 per share for Genzyme. Following negotiations between the two companies, the final acquisition price bumped up to $74 per share plus a contingent value right tied to the performance of a Genzyme drug. Likewise, Roche (RHHBY) was forced to raise initial offer for Genentech before closing the deal.

"In our opinion, this [$120 per share] offer could be Amgen's effort to bring both parties to the negotiation table," Karnauskas writes, suggesting Amgen isn't likely to give up on acquiring Onyx.

An Amgen offer for Onyx valued at $140 per share would be 5 percent dilutive to earnings in 2014 and mildly accretive in 2015, Karnauskas writes.

Onyx in partnership with the German drug firm Bayer sells the kidney and liver cancer drug Nexavar and the colon cancer drug Stivarga. On its own, Onyx sell Kyprolis, used to treat multiple myeloma.

Onyx reported 2012 revenue of $362 million. The company's revenue is expected to grow to $624 million this year, $881 million in 2014 and $1.2 billion in 2015, according to consensus analyst estimates compiled by S&P Capital IQ.

Onyx is expected to lose $1.85 per share on an adjusted basis this year but generate a profit of 51 cents per share in 2014 and $3.79 per share in 2015, according to consensus analyst estimates compiled by S&P Capital IQ.

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