NEW YORK (Reuters) - Bristol-Myers Squibb Co will buy biotechnology company Amylin Pharmaceuticals Inc for about $5.3 billion (3.37 billion pounds) in cash, helping Bristol-Myers extend its portfolio of diabetes treatments with the addition of drugs Byetta and Bydureon.
Bristol-Myers said late on Friday it had also reached a follow-on deal with UK-based AstraZeneca Plc to collaborate on developing Amylin’s products once the buyout is completed, expanding upon an existing partnership between the two pharmaceutical makers in diabetes treatments. AstraZeneca will pay $3.4 billion (2.16 billion pounds) in cash for these rights.
Bristol-Myers and AstraZeneca already collaborate on several diabetes treatments including Onglyza, and aim to strengthen their position in a growing, multibillion-dollar market. More than 360 million people worldwide have diabetes, with the overwhelming majority suffering from type 2 diabetes, a condition partly attributable to the rise in obesity in many countries.
In a statement, Bristol-Myers Chief Executive Lamberto Andreotti described the deals as a unique way to build on its relationship with AstraZeneca, which “demonstrates Bristol-Myers Squibb’s innovative and targeted approach to partnerships and business development.”
The boards of directors at Amylin, Bristol and AstraZeneca have approved the two transactions, the companies said.
Amylin began approaching potential buyers in April after rejecting a previous $3.5 billion (2.23 billion pounds) takeover bid from Bristol-Myers, and facing pressure from activist investor Carl Icahn.
In all, five pharmaceutical giants including AstraZeneca, Novartis AG and Sanofi SA were in the running for Amylin, sources familiar with the matter told Reuters this week.
Bristol-Myers will pay $31 per share for Amylin, a premium of 10 percent to the company’s closing price on Friday. Amylin’s shares had already tripled in value from a low of nearly $8 last October.
Amylin and Eli Lilly Co introduced Byetta for type 2 diabetes in 2005, and the longer-acting version Bydureon, which can be taken once a week, was approved by U.S. regulators earlier this year. Both contain the active ingredient exenatide.
Amylin scrapped its partnership with Lilly in November last year after the two became embroiled in a legal dispute. Bristol-Myers has agreed to pay an additional $1.7 billion (1.08 billion pounds) to cover Amylin’s debt and its obligations to Lilly from ending their collaboration.
Bristol-Myers will finance the purchase from its existing cash resources and credit facilities. Amylin has agreed not to solicit competing offers. The transactions are expected to be dilutive to Bristol-Myers’ adjusted earnings in 2012 and 2013 by about 3 cents per share, and become slightly accretive in 2014.
Citi and Evercore are serving as financial advisers to Bristol-Myers and Kirkland & Ellis LLP is its legal adviser. AstraZeneca’s financial adviser on the deal is Bank of America Merrill Lynch, while Davis Polk & Wardwell LLP and Covington & Burling LLP are its legal advisers.
Credit Suisse and Goldman Sachs & Co. are acting as financial advisers to Amylin Skadden, Arps, Slate, Meagher & Flom LLP is its legal adviser.
Additional reporting by Chandni Doulatramani in Bangalore; Editing by Daniel Magnowski