Rumors of Sale to DuPont Lift Amgen Stock

Shares of biomedical heavyweight Amgen bolted up 6% Friday on rumors that DuPont might pay $25 billion for the Thousand Oaks firm to bolster its pharmaceuticals business.

DuPont, the nation’s largest chemical company, has made a series of moves recently to focus more narrowly on biotechnology products. On Tuesday, it said it would acquire Merck’s stake in DuPont Merck Pharmaceutical Co., a 50-50 joint venture, for $2.6 billion. Last week, DuPont said it would spin off its energy subsidiary, Conoco, in a public offering.

Business Week magazine, quoting two unnamed sources, reported in its June 1 issue that DuPont is mulling a $95-per-share bid for Amgen. That would be a hefty premium--more than 50%--over Amgen’s recent stock price.

Amgen closed at $65.63 on Nasdaq on Friday, up $3.75. DuPont shares rose 94 cents to $82.44 on the New York Stock Exchange.

Executives from both Amgen and DuPont declined to comment. But analysts said that such a blockbuster deal is unlikely, especially while DuPont is digesting the other half of DuPont Merck.

“DuPont clearly has to increase its critical mass in pharmaceuticals, but DuPont is going to be very measured in terms of the investments and acquisitions that they make,” said Sano Shimoda, president of BioScience Securities in Orinda, Calif. “They know they have to grow the business, but is it going to be a mega-deal like that? I don’t think so.”

In announcing the Merck buyout this week, Kurt Landgraf, DuPont’s executive vice president for life sciences, said the Wilmington, Del.-based company would not make a large, dilutive acquisition of a pharmaceuticals firm.

“Kurt normally chooses his words very carefully,” said Graham Copley, a research analyst who follows DuPont for Sanford C. Bernstein in New York. “The question is, what’s large? Is $25 billion large? I think so, but maybe he doesn’t.”

Besides, Amgen has much more of an independent streak than most of its rivals such as Genentech, Chiron and Immunex, said Caroline Copithorne, senior biotechnology analyst with Prudential securities in New York.

“I don’t see them as a company that’s out there looking to be acquired or that would necessarily be amenable to that,” she said.

But if a $95-per-share offer were to materialize, Amgen would certainly give it careful consideration because “it’s a huge premium,” said Elise Wang, a biotechnology analyst for PaineWebber in New York.

Even if the DuPont rumor isn’t true, it may inspire another large company like Bristol-Meyers Squibb, Merck or Eli Lilly to go after Amgen, Wang said.

At least one investment banker who specializes in such deals said the speculation makes sense.

“It fits in with DuPont’s plans to be more and more of a pharmaceutical company and less and less of a chemical company,” he said.

Times staff writer Debora Vrana contributed to this report.