Eli Lilly and Co. will gain full ownership of the impotence treatment Cialis with a $2.1 billion acquisition of joint venture partner Icos Corp., the companies announced Tuesday.
Lilly will pay $32 per share in cash for each Icos share, a premium of about 18 percent over Monday’s closing price.
Icos said the offer represents a 32 percent premium to its average closing price over the past 90 days.
Icos shares rose $4.38, or 16.15 percent, to close at $31.50 on the Nasdaq Stock Market. In earlier trading, the stock surpassed its previous 52-week high of $30.66. Lilly shares lost 11 cents to finish at $57.55 on the New York Stock Exchange.
Indianapolis-based Lilly and Icos, a Bothell, Wash-based biotech firm, launched Cialis in 2003, the fifth year of their partnership on the drug, whose sales rose 34 percent in the first half of the year to $456 million. The joint venture sells the drug in more than 100 countries, leading the markets in France and Brazil and holding about a 25 percent share in the U.S, the companies said.
Sidney Taurel, Lilly’s chairman and chief executive officer, said the U.S. market for impotence drugs has grown 10 percent since midyear, and Cialis’ market share has grown by a couple of percentage points.
“We are very encouraged by this increased growth in the U.S.,” Taurel said in a conference call with stock analysts. “We expect (Cialis) to continue to make progress.”
The companies expect the deal to close late this year or early in 2007, and Lilly then will take a charge yet to be determined for acquiring research and development that’s underway at ICOS.
Lilly said the purchase increase its overall sales next year and boost its profit and earnings growth rate in 2008. However, the deal will dilute Lilly’s earnings next year.
Taurel said the Cialis franchise will become leaner by eliminating redundant positions at Icos in development, marketing and sales.
“We expect a significant number of jobs will be eliminated at Icos,” Taurel said, without estimating how many.
The Icos board already has approved the merger, which also requires approval by Icos shareholders, antitrust clearance and other closing conditions.