DealZone

What’s the true mystery in the ImClone takeover saga? The final price tag.

When ImClone alluded to its “mystery bidder” on Monday, it said a large pharmaceutical company had made an offer to acquire the company for $70 per share but needed more time to conduct due diligence. ImClone said the bidder would either make a firm offer by the end of the day on Wednesday or withdraw — at which point its name would be revealed.

Wednesday came and went, with Eli Lilly being reported by Reuters and others as the “mystery bidder,” but ImClone only issued a short statement confirming that a formal offer had been made — this time without mentioning the price. The name of the bidder would be revealed when negotiations were completed, ImClone said.

But wait? Why not reconfirm the $70 per share price or give the new offer? Investors wondered on Thursday whether the formal bid, made after reviewing ImClone’s books and not subject to financing, was actually lower than $70 per share ImClone previously stated.

Shares of ImClone hovered at $65.70 at midday on Thursday as investors hedged whether they’d ever see $70 a share, traders said. ImClone has already rebuffed Bristol-Myers’s sweetened offer of $62 per share for the 83 percent of ImClone it does not already own.

“A $70 offer represents a 51-percent premium to (ImClone’s) closing price prior to first acquisition announcement and corresponds to a high end of premiums paid historically in similar acquisitions,” said Rodman & Renshaw analyst Michael King.

“We view the $70 per share offer to be close enough to a final offer and presenting little upside to (ImClone’s) closing price (on Wednesday) of $65.35; hence we recommend staying on the sidelines for now. Further, we do not envision a materially higher counter offer from Bristol,” King said.

Barclays Capital analyst C. Anthony Butler said any offer significantly above Bristol-Myers’s rejected $62-per-share bid would be risky unless the buyer gained control of 11F8 — the follow-on product to ImClone’s cancer drug Erbitux. Bristol-Myers believes it has the rights to that product, but ImClone disputes that.

“We assume the critical component of any deal reached hinges upon the rights for 11F8 — a legal battle is likely to ensue,” Butler said.

A $70 per share acquisition of ImClone would not be beneficial to the shareholders of Eli Lilly, Bristol-Myers or any other potential buyer, according to UBS analyst Roopesh Patel.

At that price, a buyer “would be paying full value, without risk adjustment, for (ImClone’s) inline/pipeline drugs … and taking on substantial execution risk,” Patel said.

Patel’s estimated value for ImClone? $64 per share.