Icahn Seeks Clearance to Buy 40% of ImClone
Billionaire investor Carl Icahn is seeking antitrust approval to purchase $500 million of ImClone Systems Inc. stock, about 40% of the company.
The troubled biotech company announced Friday that Icahn filed documents with the Federal Trade Commission and the Department of Justice to clear the way for him to buy the stock.
Icahn’s filing triggered ImClone’s takeover defense provision, which would take effect after an investor acquires 15% of the stock and make it prohibitively expensive to acquire more.
“It is only prudent for us to put in a stockholder rights plan. The shares are trading at a low valuation,” said Andrew Merrill, a spokesman for ImClone. “Our view is that Icahn’s intentions are a vote of confidence. Sophisticated investors don’t make such large investments lightly.”
Analysts said the plan would probably thwart any attempt by Icahn to take over the company, making the filing a sideshow in the ImClone drama. “I think the whole thing is a moot point because he can’t get control now,” said Patrick Mooney, a biotech analyst at Thomas Weisel.
Analysts said Icahn was simply trying to cheaply acquire a major stake in what one day may be a profitable company. Last fall, Bristol Myers-Squibb paid $1 billion to acquire 19.9% of ImClone. Since then, however, ImClone’s fortunes have been declining steadily and its relationship with Bristol Myers has deteriorated into a public feud.
In December, the Food and Drug Administration refused to accept ImClone’s application to review Erbitux, a cancer drug touted as a blockbuster. The rejection sent ImClone stock into a tailspin and prompted a rash of shareholder lawsuits alleging fraud, which in turn touched off three federal investigations.
Bristol-Myers also wanted to restructure the terms of its $2-billion deal, seeking to change ImClone’s leadership temporarily, give it control of Erbitux and garner a larger portion of the profits. ImClone rejected the deal this week.
Many still believe that Erbitux is a viable drug that will eventually be approved. Icahn would be handsomely rewarded by buying a stake in ImClone at a bargain basement price. ImClone rose 84 cents, or about 4.8%, to $18.44 Friday on Nasdaq. It has dropped more than 70% since late December.
Icahn has previously taken stakes in companies such as Nabisco Group Holdings Corp., Trans World Airlines Inc. and Texaco Inc. to force changes in management or company strategy. Last year, he attempted a takeover of Visx Inc., a maker of eye surgery lasers. Icahn didn’t return a phone call requesting comment.
Icahn has had previous ties with ImClone and its Chief Executive Samuel Waksal. An investment group led by Icahn acquired a 5.1% stake in ImClone in October 1999. Waksal also was part of a proposed slate of directors that Icahn tried to nominate to the Visx board last year.
Jim McCamant, a contributing analyst at the brokerage firm Moors Cabot, believes Icahn may be stepping in to help his friend by buying a stake in the company, acting to counterbalance Bristol. Bristol didn’t return calls for comment Friday.
“Carl likes to be a player,” McCamant said. “Carl likes to make money and he can make some money here.”
“He’s taking a bet that Bristol-Myers’ working with the product will allow it to get approved, and based on that, ImClone is worth a lot more than $15 a share,” said Jon Fisher, a health-care analyst with Fifth Third Bank in Cincinnati who holds shares of Bristol-Myers and doesn’t hold ImClone shares. “I don’t think Icahn is assuming it’ll get approved this year, but he’s thinking it will be approved in ’03 or ’04.”
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Bloomberg News was used in compiling this report.
