Amgen acquires Immunex in major biotech merger

Acorn Staff Writer


Thousand Oaks-based Amgen (NASDAQ: AMGN) acquired rival Immunex (NASDAQ: IMNX) Monday, creating the largest-ever biotechnology merger and giving Amgen another new product in its growing pharmacy of blockbuster drugs.


Amgen, the No.1 biotechnology company and maker of the popular anemia drug Epogen, gains control over Immunex’s best selling rheumatoid arthritis treatment Enbrel.


Amgen will pay $16 billion in stock and net cash for the acquisition. Specifically, the deal exchanges one common share of Immunex stock for 0.44 of an Amgen common share and $4.50 in cash for a total of 85 percent in stock and 15 percent in cash.


Shares of Immunex jumped $3.44 to $29.06 on the news while Amgen’s stock added $3.46 to $59.49 following a sell-off late last week in which investors balked at the deal.


Some analysts questioned whether Amgen shareholders would benefit by paying such a high price for one drug, but broker Merrill Lynch endorsed the acquisition saying the effect on Amgen’s shares would be only "modestly dillutive" in 2002 and 2003 and that beginning in ’03 Amgen’s earnings should grow more than 25 percent a year, much higher than the previously estimate of 20 percent.


"This is a compelling strategic transaction and an excellent opportunity for the shareholders, employees and partners of both companies," said Kevin Sharer, Amgen chairman and CEO, "and we expect it will generate significant benefits for hundreds of thousands of patients around the world."


Amgen also makes Neupogen, an immunity-booster for cancer patients. Aranesp, the company’s next generation anemia drug, was launched in October. The addition of the anti-inflammatory Enbrel gives Amgen a three-part therapeutic franchise that’s unrivaled in the industry.


"This transaction creates a tremendous opportunity for Immunex shareholders to participate in the clear potential of this biotech powerhouse," said Ed Fritzky, Chairman CEO of Immunex.


Fritzky will join the Amgen board of directors.


As part of the agreement, Amgen will acquire the 41 percent stake in Immunex held by American Home Products Corporation (NYSE: AHP), for the same purchase price per share, giving AHP an 8 percent stake in the new company.





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