Drug giant Bristol-Myers (BMY) has agreed to acquire ZymoGenetics (ZGEN) for $885 million. This represents an offer of $9.75 a share in cash, or $735 million net of cash acquired as part of the deal. BMY has purchase agreements from about 40% of ZGEN's outstanding shares and expects the tender offer to close in about a month.
Bristol-Myers is paying a sizable premium for ZGEN (of about 84% based on the stock price prior to the announcement). But the acquisition would give BMY full control over ZymoGenetics' promising hepatitis C drug PEG-interferon Lambda. The two companies entered into a $1.1 billion agreement in January, 2009, to co-develop and share the profits from this drug.
ZymoGenetics is also developing treatments for bone disease, thrombosis, arthritis, melanoma, and multiple sclerosis. It markets Recothrom, a drug that controls bleeding in surgery, which is expected to generate sales of about $45 million in 2010.
Novo Nordisk, the world's largest maker of insulin, said it would sell its 26% ZGEN stake to Bristol-Myers as part of the deal.
BMY said the purchase would probably dilute its bottom line by $0.03 a share in 2010, followed by another $0.07 dilution in 2011.
This merger is an example of one of more than 200 acquisitions announced and/or completed by U.S. drug makers in the past 12 months. It is a sign that drug giants, spying an approaching patent expiration cliff for many of their flagship products, are searching far and wide for ways to prop-up their top lines in order to maintain and extend profit growth through the next decade.
