Amgen to acquire Abgenix for $2.2bn

12/15/05 - newratings.com

NEW YORK, December 15 (newratings.com) – The world's largest biotechnology company Amgen Inc (AMGN) Wednesday said that it has agreed to acquire Abgenix Inc for $2.2 billion in cash. The acquisition would give Amgen full rights to the colon cancer drug, panitumumab, which was being jointly developed by the two companies.

Under the terms of the deal, Thousand Oaks-based Amgen would pay $22.50 for each share of Abgenix, which represents a 54% premium to the Freemont, California-based company’s closing price on Wednesday. The deal also involves the assumption of about $450 million in debt. The deal, subject to regulatory and shareholder approvals, is expected to close by the end of the first quarter of 2006, Amgen said. The acquisition marks the largest one since Amgen took over Immunex in 2002 for $8.8 billion to gain the rheumatoid arthritis drug Enbrel.

The acquisition of Abgenix gives Amgen full rights to its first cancer drug, panitumumab, for the treatment of colorectal and head and neck cancer. As a result of the deal, Amgen would not have to pay Abgenix half of the drug's global profits. The company said that it expects the deal to be dilutive to its earnings by 5¢-10¢ per share in 2006 and 2007 and be earnings accretive the following year onwards.

Amgen and Abgenix said in a statement that they intend to file for the US regulatory approval for the drug later this week. The drug has peak sales potential of $2 billion per year, Amgen added.

Amgen’s share price gained 3% in after-hours trading on the NASDAQ on Wednesday.