Bristol-Myers Squibb agreed late on Saturday to buy Inhibitex, a maker of a hepatitis C treatment, for about $2.5 billion in cash, as major drug makers seek to bolster their pipelines with more profitable specialty products.
Under the terms of the deal, Bristol-Myers will pay $26 a share through a two-step merger, beginning with a tender offer. That represents an enormous 163 percent premium over Inhibitex’s Friday closing price.
A slew of big pharmaceutical companies have turned to mergers in recent years to plug holes in their drug pipelines, in large part to replace products that are set to face generic competition. Such companies are turning increasingly to smaller biopharmaceutical players developing specialized — and therefore hard to replicate — treatments.
In Inhibitex, Bristol-Myers will buy a company focused on antiviral products. Its main drug, INX-189, is an oral drug for hepatitis C that the company hopes will form the basis for simpler treatments of the disease.
Yet the deal poses an expensive bet by Bristol-Myers, which said that it expects the takeover to hurt its profitability for the next four years. Its earnings per share are expected to fall by four cents this year and five cents next year.
Inhibitex hasn’t proven profitable lately, reporting annual losses between 2008 and 2010. For the quarter ended Sept. 30, the company, based in Alpharetta, Ga., reported a $5.3 million loss atop $1.3 million in revenue.
Bristol-Myers said that it plans to finance its bid by drawing upon its existing cash hoard. Shareholders owning about 17 percent of Inhibitex’s stock have already agreed to support the merger.
Bristol-Myers was advised by Citigroup and the law firm Kirkland Ellis. Inhibitex was advised by Credit Suisse and the law firm Dechert.
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