ImClone's Icahn Is Holding a Pistol to Bristol

At the Thomson Reuters/BioCentury investment conference some hedge fund guy, who I'd never met before and who will remain unidentified, whispered in my ear that there's gonna be a bidding war for ImClone Systems (IMCL).

But I couldn't do anything with that "information." You never know where these guys are coming from and what their motivation might be to start or fuel a potential rumor.

Well, guess what? The guy was on the money. Yesterday morning ImClone announced that Chairman Carl Icahn has talked to a big pharma CEO who is apparently putting a $70-a-share offer on the table. Bristol-Myers Squibb (BMY) had offered 60 bucks and IMCL and Icahn said it was too low.

So, now the guessing game is on as to which other mystery major drug company is making a play for ImClone. The press release coyly didn't reveal the name. I'm not gonna play along, but honestly, you can pretty much take your pick among the sector as to who has the cash and the desire to pick up a significant oncology company for five billion bucks.

Deutsche Bank's veteran big pharma analyst, Barbara Ryan, is out with a research note to clients saying she thinks whoever the new bidder is that this will simply force BMY to pony up $70 a share. She writes, "This is a good strategic and financial deal for BMY at that price." She points out that the $70 offer is subject to due diligence while BMY, which is already very familiar with its cancer drug partner IMCL, can make an immediate unconditional offer for the same price.

Bristol, what say you?

Comments

[CrossProfit:]

Love the title!

BMY is going to sit it out for two, three and even four weeks, or as long as it takes until the 'mysterious bidder makes a formal public offer.

There is no point in doing anything now. Think about it, as there are only two possibilities:
1) There is another buyer and this buyer is going to make an offer.
2) Icahn is full of hot air and BMY may have to call his bluff.

In either case, BMY sits and waits.
Option one would require further action only if the final bid is higher than $60. There is always a chance that it will be lower or none at all. If higher than $60, then BMY will have to assess how real it is and what are the chances of it closing. There is always a chance that the new bidder will pull the offer.

Either way, BMY should immediately withdraw its $60 offer if another offer is made. This way it can come back and offer a higher PPS if it feels that the competing bid would close OR come back with a LOWER offer if it feels that the bid is smoke and mirrors.

For shareholders sake, let's hope Icahn isn't playing games.

CrossProfit
Disclosure: No conflicts.

2008 Sep 11 08:20 AM

[selene:]

Since Icahn's an insider and the chair of IMCL board, I think he could be in deep doo-doo if he is completely making this stuff up.

2008 Sep 11 10:01 AM

[nova:]

I said it many times on this board:
- There is no any need to sell IMCL now for under $90. A merger, at this junction, can only benefit BMY and the Street that urgently needs M&A business
- Bristol was a loser and is a loser. It can take its bid and never come back
- IMCL does not need BMY. BMY can sell its IMCL stake and/or its Erbitux rights tomorrow
- As for the Street evaluation of IMCL and its potential, these crooks are staying out of bankruptcy ONLY with the Treasury and the FED endless money infusion. Does anybody in his/her sound mind need their advice?
- If Carl screws IMCL shareholders, he has a good chance to join Sam Waksal in a jail cell.

2008 Sep 11 03:42 PM

[User 260301:]

Let us make one thing very clear, ICAHN may just be BLUFFING. First off, rather than give a press release, he should have directly discussed the new bid with Bristol in "good faith" and given them a chance to make a increased bid. He did not do that, then he is just saying "some big pharma" and hoping BMY will increase the bid. Why should they? Icahn's brother Jerry Yang was trying such lame tactics with the MSFT-YHOO merger talks and what happened?

As somebody who thinks IMCL is worth $90 - it DID NOT seem so a few months back. Besides if you want to beat colon cancer, you can easily do that by eating more fiber and controlling your diet, rather than hoping for the magic drug from IMCL to come along and save you.
Disclosure: Long BMY.

2008 Sep 11 05:39 PM