Amgen Announces $1.16 Billion Acquisition (NASDAQ: AMGN)
Amgen has agreed to buy Micromet for $1.16 billion, or $11 a share, which is a 33% premium over Micromet’s share price the day before the deal was announced. The company said in a statement that the deal will likely close in the first quarter. Amgen has the distinction of being one of the world’s largest drug makers, averaging more than $15 billion annually in revenue.
Amgen will acquire Micromet’s shares during two separate phases. In the first, a subsidiary of Amgen will purchase a majority of Micromet’s outstanding shares at $11 per share. In the second phase, the parent company will buy any remaining shares, paying the same price per share.
Micromet is a biotechnology company that develops cancer therapies that target blood and solid tumor cancers, including leukemia and non-Hodgkin’s lymphomas. The company is based in Rockville, MD and has research facilities in Munich. Micromet currently has no drugs on the market and has blinatumomab, a treatment for acute lymphoblastic leukemia, currently in Phase 2 trials.
Kevin Sharer, Amgen’s chief executive, said, “The acquisition of Micromet is an opportunity to acquire an innovative oncology asset with global rights and a validated technology platform with broad potential clinical applications. Blinatumomab will serve as an important complement to our oncology pipeline.”
For the past five years, the company has struggled to come up with new blockbuster drugs, only introducing one successful blockbuster, an osteoporosis treatment called denosumab. In 2011, the company reduced its research and development staff by 6% and announced its intentions for a $5 billion share buyback.
Eric Schmidt, a Cowen Group analyst, said, “Amgen’s acquisition speaks to the never ending appetite of larger companies for smaller companies in the biopharmaceutical market.” However, he also said, “I would rather see Amgen play its own cards, as opposed to acquire another business at a significant premium,” showing his skepticism about the company paying the rich premium for Micromet and its ability to extract significant value from the deal.