Amgen To Buy Cancer Drug Maker Onyx Pharmaceuticals For $10.4 Bln

(RTTNews) - Amgen Inc. (AMGN) finally reached a deal on Sunday to buy cancer drug maker Onyx Pharmaceuticals Inc. (ONXX) for about $10.4 billion, thus gaining the myeloma drug Kyprolis.

Amgen, in a statement said it will pay Onyx shareholders $125 a share in cash. The company said the purchase price is $9.7 billion excluding Onyx's estimated cash. The agreement ends the two-months long struggle between both the companies to reach a deal.

The $125 a share price for Onyx, represents a 4.2 percent increase from the $120 a share Amgen offered in June, which Onyx had rejected citing as "significantly undervalued." The new offer also represents a premium of 6.9 percent from Onyx's closing price of $116.96 on August 23, Friday.

Amgen has gained the full rights of Kyprolis, the newly approved multiple myeloma drug, with the acquisition of Onyx. Market analysts expects Kyprolis to generate annual sales in between $2 billion and $3 billion in few years. Kyprolis has an orphan drug designation in the U.S. with exclusivity until July 2019, and patents in the U.S. which extend until at least 2025.

Amgen will also gain revenues from Nexavar, the liver and kidney cancer drug that Onyx sells in partnership with Germany's Bayer AG, and also royalty payments from Bayer's colon cancer treatment Stivarga. The company will also gain revenues from palbociclib, a Pfizer Inc. compound.

The revenues generated from these new cancer drugs is expected to boost Amgen's top line that has started showing some weakness with the emergence of generic competition for its top selling drugs. Amgen also expects the acquisition to be accretive to Amgen's adjusted net income in 2015.

Amgen plans to fund the acquisition through a tender offer and to close it at the beginning of the fourth quarter, subject to customary closing conditions. Amgen said it will use $8.1 billion in committed bank loans and the rest with cash available in the U.S.

"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 Amgen Chief Executive Robert Bradway. "We expect this acquisition will accelerate growth and enhance value for Amgen shareholders."

Tony Coles, chief executive officer of Onyx, said, "We are pleased to have reached this agreement with Amgen, a company that shares Onyx's vision for innovation on behalf of patients."

ONXX closed Friday's trading at $116.96, down $0.63 or 0.54%, on the Nasdaq. The stock is currently up $1.04 or 0.89% in after-hours trade.

AMGN closed Friday's trading $105.60, down $0.69 or 0.65%, on the Nasdaq. The stock is currently up $0.12 or 0.11% in after-hours trade.