Amgen Snags Immunex in $16 Billion Deal

24 December 2001 00:00  [Source: ICB Americas]

The mergers and acquisitions spree in the biotechnology sector reached a fever pitch last week with Amgen Inc.'s $16 billion purchase of Immunex Corp. The deal will help reinvigorate sales growth for Amgen, which has seen a slowdown in the growth of its two main products, Epogen and Neupogen.

Amgen will pay for the company with a combination of stock and net cash. Each share of Immunex common stock will be exchanged for a fixed ratio of 0.44 shares of Amgen common stock and $4.50 in cash. Amgen will also acquire American Home Products Corp.'s (AHP) 41 percent stake in Immunex for the same purchase price per share. The price gives AHP, which has agreed to vote in favor of the transaction, an 8 percent stake in the new company.

Amgen will gain access to Enbrel, Immunex's key rheumatoid arthritis drug with significant sales potential.

"We firmly believe that, as a result of this combination, Enbrel--the fastest growing biologic drug ever--will reach its peak of $3 billion or more in annual sales," says Kevin Sharer, chairman and CEO of Amgen.

Though there is concern over purchase price, analysts generally think the combination is solid. "In our view, this agreement makes strategic sense, and we would liken it to Pfizer's acquisition of Warner-Lambert. Like Warner's Lipitor, Immunex's Enbrel is on its way to blockbuster status, and it is our belief that Amgen has the marketing and management talent to take full advantage of Enbrel's potential," says Robertson Stephens analyst Michael King.

Immunex's hefty price tag dwarfed the record-breaking $2 billion purchase of COR Therapeutics Inc. by Millennium Phar-maceuticals Inc., also this month. The acquisition adds to the growing list of mergers among biotech companies, including Medimmune Inc.'s $1.5 billion purchase of vaccine-developer Aviron, and Cephalon Inc.'s $450 million buy of France's Group Lafon.

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