The battle for Bristol-Myers Squibb’s unsolicited bid to buy ImClone Systems began August 4. ImClone and its chairman opposed the $4.5 billion offer and suggested that the company would be worth more to shareholders if it were split in two, according to The Wall Street Journal.
The ImClone board reviewed last week’s $60-per-share offer but believed that the offer undervalued the company. Carl Icahn agreed and added that he questioned whether Bristol-Myers may have had access to confidential information about ImClone before offering to acquire the 83 percent of shares it doesn’t already own, thus unvdervaluing ImClone’s value.
The resulting buyout battle leaves analysts saying that while the battle is ongoing, a deal will likely occur, but at a higher price. Eric Schmidt, biotech analyst at Cowen & Co. told WSJ, “I suspect this is more posturing,” he said. “I think this is heading toward a deal between these two companies. The question is, what price.”
ImClone has already discussed separating the company into two business, one for Erbitux, ImClone’s biologic cancer drug, and another for its promising drug-development pipeline. According to the WSJ, Icahn was “disturbed” that Bristol-Meyers had a designated member of ImClone’s board who “was privy” to discussions regarding the restructuring.
A Bristol-Myers spokesperson said, “We believe we have made a full and fair offer, and we look forward to a response from ImClone’s board on that offer.”
Meanwhile, WCI Communities, the homebuilder whose chairman is Icahn, filed for Chapter 11 bankruptcy protection after losing 90 percent of its value in the past year, according to a Bloomberg report.
“Like in all distressed industries, there is a cycle, much like in the casino and energy companies of seven or eight years ago,” Icahn said in a telephone interview with Bloomberg. “In housing, there is still a bumpy road ahead.’”
CEO Jerry Starkey will leave and COO David Fry will take over as interim CEO. WCI is in talks to receive $100 million in debtor-in-possession financing from several lenders, according to Bloomberg.
In the company’s statement, Icahn said the builder tried “with all diligence” to avoid bankruptcy. Icahn controls approximately 6.1 million shares, or 15 percent of WCI, making him the largest shareholder. WCI fell by 58 percent in early trading in New York.