Amgen, Inc. (NASDAQ:AMGN) announced on Sunday that it plans to acquire all outstanding shares of Onyx Pharmaceuticals, Inc. (NASDAQ:ONXX) under an agreement for $125 per share in cash. With the agreed per share cost, the purchase price comes $10.4 billion, or $9.7 billion net of estimated Onyx cash.
“We believe that Amgen is ideally suited to realize the full potential of Onyx’s portfolio and pipeline for the benefit of physicians and patients,” said Robert A. Bradway, chairman and chief executive officer at Amgen, Inc. (NASDAQ:AMGN).
Acquisition to boost Amgen’s portfolio
Onyx Pharmaceuticals, Inc. (NASDAQ:ONXX) is an international bio pharmaceutical company that specializes in development and commercialization of groundbreaking therapies for enhancing the lives of people with cancer.
Bradway added that Onyx is committed to bringing in innovative medicines meant for serious unmet medical needs. He said that the acquisition will enhance growth and value for Amgen, Inc. (NASDAQ:AMGN) shareholders.
Amgen will benefit from Onyx’s global and innovative oncology portfolio and pipeline. Amgen’s oncology capabilities will receive support from Onyx’s clinical development programs. Amgen will get the benefit of late-stage pipelines by taking over Onyx, which includes nine innovative products, and four amongst these nine are innovative, first-in-class oncology products.
It is expected that the acquisition will boost adjusted net income for Amgen in 2015.
Amgen paying premium over the earlier bid
Amgen, Inc. (NASDAQ:AMGN) will acquire the shares at a premium to the $120 per share bid announced by Amgen in July, and rejected by Onyx. Friday’s closing price for Onyx was $116.96.
Amgen is looking forward to concluding the deal through a tender offer and is expecting to complete the process by the start of the fourth quarter, obviously after fulfilling the customary closing conditions, including the receipt of regulatory clearance.
Amgen, Inc. (NASDAQ:AMGN) will fund the acquisition with $8.1 billion in committed bank loans and the balance with cash available in the United States. The loan will be for five years and will carry an average interest charge of LIBOR plus 104 basis points. Amgen is hopeful that it will get its investment grade credit rating back after the successful acquisition and will substantially increase the dividend over time.
The transaction is subject to the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act and other customary closing conditions. Lazard is the lead advisor to Amgen, Inc. (NASDAQ:AMGN); Bofa Merrill Lynch is co-advisor.