Eli Lilly to acquire ImClone

Eli Lilly & Co.’s winning bid of more than $6 billion for cancer drug maker ImClone Systems Inc. means a billion-dollar payday for former rival bidder Bristol-Myers Squibb Co. and vindication for corporate raider and ImClone Chairman Carl Icahn.

Lilly said Monday that it would pay $70 a share for New York-based ImClone. The acquisition, Lilly’s largest, would help the Indianapolis drug maker prepare for patent expirations and build “a true oncology powerhouse,” Lilly Chief Executive John Lechleiter said.

The deal also brings to an end one of the more dramatic buyout sagas in recent history.

Lilly’s bid topped two previous offers from Bristol-Myers Squibb, which partnered with ImClone to develop and market the blockbuster drug Erbitux. In July, New York-based Bristol-Myers offered $60 a share for the 83% of ImClone it didn’t already own and later raised that bid to $62.

But Bristol-Myers said in a statement Monday that it would not increase its bid.

Bristol-Myers stands to pocket about $1 billion for its 14 million ImClone shares, while still sharing in revenue from Erbitux. The drug maker gets 61% of the North American revenue from Erbitux and splits sales with ImClone and Merck & Co. in Japan.

Icahn, who became ImClone chairman two years ago, had called Bristol-Myers’ $62 offer “absurd” last month and said the biotech company had another suitor, whom he wouldn’t name. On Monday, he said Lilly’s price “vindicated” his opposition to a 2006 buyout offer worth $36 a share.

Lilly shares dropped $2.89, or 7%, to $38.42. ImClone rose $1.93, or 3%, to $66.89.