AMGEN TO PAY $16 BILLION FOR FELLOW 'GOLIATH'.Byline: Evan Pondel Staff Writer OAKS - Amgen Inc. confirmed Monday that it will buy Immunex Corp. for about $16 billion, blurring the lines between the world's largest biotechnology company and a leading pharmaceutical player. ``It's like Goliath is swallowing Goliath,'' said Jennifer Chao, analyst with Leerink Swann & Company in Boston. ms call for Thousand Oaks-based Amgen to fund the purchase with $14 billion in stock and $2 billion in cash. Amgen will curb planned new hires and cut less than 5 percent of the combined work force, said Rebecca Hamm, Amgen spokeswomen. The acquisition brings together two companies that are poised to dominate the field of rheumatoid arthritis rheumatoid arthritis Chronic, progressive autoimmune disease causing connective-tissue inflammation, mostly in synovial joints. It can occur at any age, is more common in women, and has an unpredictable course. , with Immunex's blockbuster drug A blockbuster drug is a drug generating more than $1 billion of revenue for its owner each year. The search for blockbusters has been the foundation of the R&D strategy adopted by big pharmaceutical companies, but this looks set to change. Enbrel and the recent approval of Amgen's Kineret. With those two drugs, Amgen expects to accelerate its five-year sales growth to the low 30 percent range from the current estimated increase in the low 20 percent range. Amgen won FDA FDA abbr. Food and Drug Administration FDA, n.pr See Food and Drug Administration. FDA, n.pr the abbreviation for the Food and Drug Administration. approval for Kineret last month, but clinical studies showed it to be less effective than Enbrel and unlikely to sell as well. Amgen forecasts speeding up sales of Enbrel to at least $3 billion by 2005 from $750 million this year due to supply constraints. Immunex projected that it sees Enbrel sales as high as $4 billion by 2005. ``We are strongly committed to growing Immunex's world-class discovery research capabilities,'' Kevin Sharer, Amgen's chief executive officer, said in a statement. Analysts, though, were skeptical. ``I must say I continue to have some reservations of the ability to reach these numbers,'' said Dennis Harp, analyst with Deutsche Banc Alex. Brown in New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of . The agreement also reduces Madison, N.J.- based American Home For the American mortgage lender, see . The American Home is a center of intercultural exchange located in Vladimir, Russia. The home is designed to model a typical American suburban home and its main focus is the ESL school that provides lessons for Russian students. Products' stake in Immunex, based in Seattle, from 41 percent to 8 percent. In 2002, the combined company, which will be called Amgen, will have pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma revenues of about $5.5 billion and net income that exceeds $1.5 billion. Cost savings are expected to total more than $200 million in 2003, and more than $250 million in 2004, accounting for about 5 percent of the combined company's operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. . What draws pause from some analysts is that the deal would dilute Amgen's earnings. Amgen projected in November that it would have earnings-per-share growth in the low 20 percent range this year. Amgen said the transaction will reduce earnings per share in 2003 at less than 5 percent. However, the company did not provide projections for 2002. ``This is what makes the whole thing a little hazy haz·y adj. haz·i·er, haz·i·est 1. Marked by the presence of haze; misty: hazy sunshine. 2. ,'' Chao said. ``The deal could be heavily dilutive in 2002.'' Analysts also don't like the price Amgen is paying. ``It's pretty lofty,'' Harp said. The transaction is expected to close during the second half of next year but it must be approved by shareholders of both companies. Amgen shareholders will own 81 percent of the newly formed company and Immunex shareholders will own 19 percent. Doug Christopher, analyst at Crowell, Weedon & Co. in Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. , said Amgen is spending enough money marketing Aranesp and Kineret and that the purchase was unnecessary. He said acquisitions, especially for a company like Amgen, are expensive and never pay off. Still, Sharer said acquisitions are important in an industry where size does matter. A factionalized biotech sector saw a spate of deals this month when Millennium Pharmaceuticals Millennium Pharmaceuticals NASDAQ: MLNM is a biotechnology company based in the Cambridge, Massachusetts area of the United States of America. Founded in 1993, the company conducts research in various scientific areas, currently focusing on inflammation and oncology. Inc. agreed to buy Cor Therapeutics Inc. for $2 billion in stock and MedImmune Inc. announced a $1.3 billion deal to buy Aviron. Ed Fritzky, chairman and chief executive of Immunex, said amid all the partnerships in the biotech sector, ``we are very interested in becoming Amgen.'' Fritzky will join Amgen's board. Speculation about the deal last week caused Wall Street to flinch flinch intr.v. flinched, flinch·ing, flinch·es 1. To start or wince involuntarily, as from surprise or pain. 2. To recoil, as from something unpleasant or difficult; shrink. n. Thursday as shares of Amgen declined $4.20, or 6.5 percent, to $60.19, while Immunex leaped $2.51, or 10.27 percent, to $26.96 by the end of the trading day In Business, the trading day is the time span that a particular stock exchange is open. For example, the New York Stock Exchange is, as of 2006, open from 09:30AM to 4:00PM. Trading days never take place on weekends. . Amgen's share price continued falling Friday. Monday, Amgen rose $3.46, or 6.2 percent, to close at $59.49, while Immunex soared $3.44, or 13.4 percent, to close at $29.06. ``Wall Street is now generally pleased with everything,'' said Craig West, analyst with A.G. Edwards & Sons, Inc. in St. Louis. `` And these are the things you want to see.'' |
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