Amgen has just agreed to purchase Onyx Pharmaceuticals for nearly $10.4 billion in cash, giving the company access to three anticancer treatments.
Although Amgen is the biggest biotech company in the world, the drugmaker does not have any presence in the fast-growing market of cancer drugs.
Following months of negotiation, cancer drug-specialist Onyx agreed that Amgen will buy outstanding shares of the company for $125 per share – $3 more than the previous bid made in June. Amgen stated that it will be financing the acquisition with $8.1 billion in committed bank loans as well as using cash reserves of $2.3 billion.
The company predicts to close around the beginning of the fourth quarter – subject to the satisfaction of customary closing conditions. Robert A. Bradway, chairman and chief executive officer at Amgen, said: “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.
Our acquisition of Onyx follows a thorough due diligence process and is fully consistent with our strategy of advancing innovative medicines that address serious unmet medical needs.
We expect this acquisition will accelerate growth and enhance value for Amgen shareholders.Amgen has a unique opportunity to add value to Kyprolis, a product which is at an early and promising stage of its launch.” Onyx has an established and growing multiple myeloma franchise.
Its Kyprolis® (carfilzomib) for Injection is already FDA approved in the U.S. Onyx also has partnered oncology assets, including Nexavar® (sorafenib) tablets (an Onyx and Bayer HealthCare Pharmaceuticals, Inc. compound), Stivarga® (regorafenib) tablets (a Bayer compound), and palbociclib (a Pfizer, Inc. compound).
Dr. Tony Coles, chairman and 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.
He added: “This transaction is an important affirmation of the meaningful value our employees have created, and we look forward to rewarding our stockholders with an immediate and attractive premium.”
The transaction is expected to bring in significant revenue growth and return on capital.
Bradway concluded: “Our two companies share a strong culture of innovation and a focus on patient needs. I look forward to bringing the talented people of Onyx and Amgen together as we continue to fulfill our commitment to unlocking the potential of biology for patients suffering from serious illnesses.”
Return on capital refers to the ratio between the money you put into an investment, and the amount you get back.