Eli Lilly raises offer for Icos to $2.3 billion
Monday, December 18, 2006; 11:02 AM
BOSTON (Reuters) - Eli Lilly and Co. <LLY.N> said on Monday it has increased its offer for biotechnology company Icos Corp. <ICOS.O> to $2.3 billion from $2.1 billion after at least one Icos shareholder called the earlier bid too low.
The revised price of $34 a share follows objections from HealthCor Management, a big Icos shareholder, and advisory firms such as Institutional Shareholder Services, to the earlier $32-a-share offer. HealthCor argued that Icos was worth more than $40 a share.
Spokespeople for ISS and HealthCor were not immediately available for comment.
Lilly, which agreed in October to acquire Icos to gain full ownership of the erectile dysfunction drug Cialis, said its latest offer was its "best and final offer."
"We are confident that Icos shareholders will recognize the substantial value and the certainty that Lilly is offering," Sidney Taurel, Lilly's chief executive officer, said in a statement.
Shares of Icos rose 47 cents, or 1.4 percent, to $33.82 in mid-morning trading on Nasdaq. Lilly's shares fell 79 cents, or 1.4 percent, to $53.77 on the New York Stock Exchange.
Indianapolis-based Lilly, which currently markets Cialis with Icos through a joint venture, said the boards of both companies have unanimously approved the new offer.
Lilly is eager to take advantage of a revival in the erectile dysfunction market, which was hurt last year by concerns that drugs to treat the condition, including Pfizer Inc.'s <PFE.N> Viagra, could cause blindness.
Last week Icos said it expects sales of Cialis to reach at least $1.1 billion next year. It projected 2007 net income of between $52 million and $63 million.
In an earlier report, ISS said that Lilly's initial offer reflected the big drugmaker's ability to limit deal discussions to the "my way or the highway variety." ISS said the Icos board was hamstrug by contractual limitations imposed by the joint venture agreement.