Bristol-Myers Offers $60/Share for ImClone

ImClone shares are soaring on news of the $4.5 billion cash bid.
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Bristol-Myers Squibb

(BMY) - Get Report

early Thursday announced a bid to buy

ImClone Systems

(IMCL)

for $60 a share, or about $4.5 billion.

The drugmaker's all-cash bid of $60 a share represents a 30% premium over ImClone's closing price Wednesday. However, shares of ImClone are soaring in premarket trading Thursday, up $19.14, or 41%, at $65.58 recently.

Bristol-Myers, which already owns about 17% of ImClone's outstanding shares, partners with the biotech company to develop and market Erbitux, a cancer therapy for treatment of metastatic colorectal cancer as well as squamous cell carcinoma of the head and neck.

Under their 2001 agreement, ImClone receives a distribution fee based on a flat rate of 39% of North America net sales of the drug. This U.S. agreement, which was amended in July 2007 to allow for further development of the drug for other treatments, expires in September 2018.

Bristol-Myers and ImClone struck a deal in late 2004 with

Merck KGaA

to co-develop Erbitux in Japan. They received marketing approval for Erbitux there two weeks ago, as a treatment, in combination with irinotecan, for colorectal cancer.

New York-based Bristol-Myers imformed ImClone of its offer in a letter Bristol CEO James Cornelius sent this mornign to Carl Icahn, ImClone's chairman. Cornelius wrote, "A full combination of BMS and ImClone is a natural fit for both our companies, and we are convinced our proposed price represents a full and fair offer for ImClone."

This article was written by a staff member of TheStreet.com.