Eli Lilly & Co. Sweetens Offer for Hybritech : Boosts Price by $3 to $32 Per Share

Pharmaceutical giant Eli Lilly & Co. said Tuesday that it would pay at least $413 million to acquire Hybritech, sweetening by $39 million its original offer for the San Diego-based genetic engineering company.

The renegotiated agreement, which boosted Lilly’s per-share offer to $32 from $29, occurred only four days after a previous merger deal between the two companies had stalled in the face of a Jan. 1 deadline.

Hybritech Chairman Howard E. Greene Jr. said: “We were tickled pink with the $29-value-per-share offer, so how could we be not ecstatic about $32 per share?”

Irving Katz, an analyst with San Diego Securities, said: “Time ran out on Lilly and it had to pay an additional $39 million for Hybritech.

From Hybritech’s point of view, the (new agreement) worked to its advantage. They got an extra 10% on the package.”

Long-Term Payments

The new offer calls for Lilly to pay $22 in cash or convertible notes for each of Hybritech’s 12.9 million shares of common stock, plus warrants for Lilly stock valued at $7 a share.

Additionally, Lilly agreed to make long-term payments that, depending on Hybritech’s operating results through 1995, could be worth $22 a share more--pushing Lilly’s price for Hybritech to more than $600 million.

Greene said those additional payments would be at least $3 a share.

Lilly’s new offer, which slightly exceeded Hybritech’s closing price Monday, reflected the “substantial” growth that biotechnology stocks have enjoyed since Lilly and Hybritech announced their initial agreement on Sept. 18, according to a Lilly spokesman.

Both Lilly and Hybritech said their previous deal was stalled by a time-consuming Securities and Exchange Commission review of Hybritech’s proxy materials.

That review ended last week, but the commission’s findings did not affect the merger plan, Greene said.

Greene described the new offer as “an extremely attractive deal” for Hybritech shareholders, who now can benefit from the stock market’s upswing.

Hybritech’s stock, which was trading at about $25 before the acquisition agreement, closed down 62.5 cents at $31 on Tuesday. Lilly’s stock has risen 25% since the Sept. 18 agreement.

The acquisition, which is scheduled to be completed by April 30, must be approved by Hybritech shareholders during an as-yet unscheduled special meeting.

However, 30% of Hybritech’s shareholders already have granted Lilly options to purchase their stock, and Hybritech’s board of directors has granted Lilly an option to purchase 13 million unissued shares of Hybritech’s stock.