said Thursday that it will acquire
in a $2 billion stock swap, representing one of the largestbiotech mergers ever.
The deal will give Cor shareholders a 77% premium, despite slippingsales growth of the company's premier drug.
Millennium rode the wave of the 1999 genomics revolution to a hugevaluation, but the company has struggled somewhat this year because of aperceived lack of progress in turning the treasure trove of geneticinformation into real drugs. By acquiring Cor, Millennium gets access toIntegrilin, an established blood clot-fighting drug. Before today's deal,Millennium had only one drug on the market, the cancer drug Campath.
Shares of Cor soared in Thursday trading, rising $8.77, or 44%, to$28.51. Shares of Millennium fell $5.70, or 16%, to $29.75.
Terms of the deal call for Millennium to issue 0.9873 shares of itscommon stock in exchange for each Cor share. Using Millennium's closingprice of $35.45 Wednesday, the deal values Cor at $35 per share, or a 77%premium to its Wednesday closing price of $19.74.
Press reports in the past few weeks had speculated that Cor might befor sale for about $40 per share. Gabe Hoffman of hedge fund Welch Capitalbelieves Cor could have been forced to lower its price because sales growthof Integrilin is slipping, which would have forced Cor to badly missfourth-quarter estimates. Commenting on
, Hoffman points outthat in the press release on the deal, Cor admits that it is "revising"2001 Integrilin sales to $225 million to $230 million worldwide. But whatthe company doesn't point out is that this represents an 8% drop from itsprevious 2001 estimate given just five weeks ago, or a whopping 30% fall-offfor the fourth quarter."
Cor would have missed Q4 by a mile," Hoffman writes. "It'shard to understand how there could be such a quarter-over-quarter decline insales for a product that will still grow over 20% for the full year 2001over 2000 even with the reduced guidance. Channel stuffing perhaps?" (Hoffmanhas no position in either Millennium or Cor.)
In explaining the deal Thursday morning, Millennium executives saidbuying Cor not only adds Integrilin to its roster, but also increases thenumber of experimental drugs in clinical trials from six to nine. Another threeor four drugs currently in preclinical development could also start humantrials in 2002.
Combined, Millennium and Cor will also have about $400 million incombined revenue and $2 billion in cash, the companies said.