Amgen Shares Soar on Talk of Takeover by Bristol-Myers : Biotech: Some analysts doubt an acquisition because the likely bid price would be too costly. The firms decline to comment.
Shares of Amgen Inc. soared Wednesday before easing off on persistent Wall Street rumors that pharmaceutical giant Bristol-Myers Squibb has takeover designs for the world’s largest biotechnology company.
Amgen, based in Thousand Oaks, closed up $5.375 at $70.75--a two-year high--in frenzied trading of 6.1 million shares on Nasdaq. Earlier in the day, the stock was up as much as $10.75 at $76.125.
Bristol-Myers stock fell $1 to $60.875.
Spokesmen for Amgen and New York-based Bristol-Myers declined to comment on what they called “rumors and speculation.” As recently as last week, Amgen Chairman Gordon Binder told Wall Street analysts that remaining independent was the best way to boost the company’s stock price.
The biotechnology and pharmaceutical industries have been rife with takeover rumors for months amid a flurry of multibillion-dollar mergers and other consolidation moves.
Amgen, with healthy profits and two successful drugs on the market, has been a subject of much speculation, with Bristol-Myers mentioned as its most likely acquirer. The rumors--which Wednesday pegged Bristol-Myers’ likely bid at $90 a share--have helped propel Amgen’s stock from $55 in November.
Amgen itself has been a suitor. It acquired Synergen Inc., a Colorado biotechnology firm, in November for $262 million, and Binder last month told an investment conference in San Francisco that Amgen is considering making other acquisitions.
Another rumor making the rounds on Wall Street is that F. Hoffmann-La Roche, the U.S. arm of Roche Holding Ltd. of Switzerland, might bid $100 a share for Amgen, traders told Bloomberg Business News.
“These rumors come up all the time,” said Martin Hirsch, a spokesman for Hoffmann-La Roche in Nutley, N.J. “We don’t comment on speculation or rumors.” Hoffmann-La Roche has an international marketing agreement with Amgen to sell Neupogen, a drug that stimulates production of white blood cells.
Some analysts are skeptical about the possibility of an Amgen takeover.
An Amgen buyout is “extraordinarily unlikely,” says Teena L. Lerner, biotechnology analyst at Lehman Bros. in New York.
For one thing, Amgen would command a hefty price tag that only a handful of large pharmaceutical companies would be able to pay. At $90 a share, an Amgen takeover would cost more than $12 billion, making it one of the largest corporate takeovers in history.
“It would be very expensive, very dilutive (to earnings) and a challenge for anybody,” Lerner said.
But Bristol-Myers has taken on such challenges before: Its 1989 acquisition of Squibb Corp. is still the biggest health care industry merger to date.
Some analysts say Amgen makes a highly attractive acquisition for a big pharmaceutical company looking for a way to drive sales growth and invigorate its research pipeline. Like several other big drug makers, Bristol-Myers faces challenges on a number of fronts: intense pressure from managed health care companies to cut drug prices, competition from generic drugs and a paucity of new drugs to stimulate future sales. Also, Bristol-Myers must cope with the expiration of U.S. and German patents on its flagship product, the cardiovascular drug Capoten.
Amgen and Bristol-Myers could make a good combination because their cancer research is complementary. Bristol-Myers is a leading maker of drugs used in cancer treatment, while Amgen’s Neupogen helps restore the immune systems of chemotherapy patients and its Epogen is used as treatment in kidney dialysis and to treat anemia in AIDS patients.
Edward Hurwitz, an analyst at Robertson Stephens & Co. in San Francisco, said Amgen has been selling at a relative discount to other pharmaceutical stocks. He reasons that Amgen, with two blockbuster products, is more comparable to large drug makers than much smaller biotechnology firms with few or no products.
And Amgen is capable of growing much faster than other drug companies, Hurwitz said. Indeed, sales of Amgen’s Epogen, which stimulates red blood cell growth, rose 20% last year, while Neupogen sales were up 18%.
Bloomberg Business News contributed to this report.
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The Rise of Amgen
Amgen’s stock price has soared this year. Weekly closes, except latest:
Wednesday: $70.75, up $5.375
Source: Bloomberg Business News
