Updated from 9:50 a.m. EDT

ImClone Systems ( IMCL) has agreed to be acquired by Eli Lilly ( LLY) for about $6.5 billion.

The agreement follows ImClone's rejection of a sweetened takeover offer from Bristol-Myers Squibb ( BMY). Bristol-Myers last week announced its intent to go hostile with its bid for ImClone, raising its offer to $62 a share and going directly to shareholders.

The Eli Lilly agreement, which values ImClone at $70 a share, has been approved by the boards of both ImClone and Eli Lilly. Shares of ImClone, which makes the cancer drug Erbitux, were rising 2.6% to $66.67 in recent trading.

Eli Lilly said the offer represents a premium of 51% to ImClone's closing stock price on July 30, the day before Bristol-Myers Squibb's acquisition offer for ImClone was made public.

"This combination delivers compelling and certain value to ImClone stockholders," said ImClone CEO John Johnson in statement Monday.

Bristol-Myers indicated it would not raise its offer, but also isn't walking away empty-handed. The company said it owns roughly 14.4 million shares, or 16.6%, of ImClone -- thus the transaction is worth about $1 billion in cash for Bristol-Myers.

"We felt it was in the best interest of Bristol-Myers Squibb shareholders not to raise our previous $62/share all cash offer, exercising discipline and evaluating this potential investment within the context of other alternatives open to the company," Bristol-Myers Chairman and CEO James Cornelius said in a statement.

The Eli Lilly transaction isn't subject to any financing condition and is expected to close in either the fourth quarter of 2008 or the first quarter of 2009, Eli Lilly said.

If you liked this article you might like

Allergan's Restasis Patent Transfer to Face Precedent-Setting Legal Battle

Eli Lilly Still Looking for Lower Prices

Is Lilly Headed for the Valley?

Walmart, With Extra $10M Fund, Is Among 7 Giving for Hurricane Irma Relief