Gilead to Take Over Myogen for $2.5 billion

In a move to diversify its product portfolio, Gilead Sciences Inc., a biopharmaceutical company that mainly centralizes on HIV, hepatitis B and influenza drugs, on Monday has announced its plan to take over Myogen Inc. for about $2.5 billion in cash.

After signing a definitive agreement with Myogen, a biopharmaceutical company focused on the small molecule therapeutics for the treatment of cardiovascular disorders, Gilead would get access to Myogen's experimental treatment for pulmonary arterial hypertension (PAH). Its a condition in which there is high blood pressure in the arteries of the lung which leads to shortness of breath, chest pain and at last, heart failure.

The deal has been structured as a two-step acquisition, which, in first stage, comprises a cash tender offer for all of the outstanding Myogen common stock at $52.50 per share, followed by a cash merger in which Gilead would acquire any remaining outstanding Myogen common stock at $52.50 per share.

Gilead’s offer prices to Myogen shareholders i.e. $52.50 a share is a premium of 50% over the stock's closing price Friday of $35.08 a share.

Upon completion of the second-step merger, Myogen will become a 100% owned subsidiary of Foster City, California based Gilead. The merger is expected to be dilutive to Gilead's earnings in 2007 and 2008, neutral in 2009 and accumulative in 2010 and the hereafter.

The acquisition deal has taken by many surprises, not only for the offer price but because it represented a move for Gilead out of its region of proficiency in infectious diseases.

The board of directors of Westminster, US based Myogen unanimously has voted to recommend the tender offer and the merger to its stockholders. "We are proud to join with Gilead Sciences, one of the premier biopharmaceutical companies in the world, in advancing the care of patients suffering from life-threatening diseases," said J. William Freytag, PhD, President and Chief Executive Officer, Myogen, Inc.

Emphasizing on the significance of the merger to continue the success of the companies, Freytag said, "Myogen was founded 10 years ago with a vision of making important contributions to the treatment of cardiovascular disorders. Through the dedication and effort of our talented employees, we have made tremendous progress. Bringing Myogen and Gilead together will allow us to build on our progress to date and expand the resources committed to that vision."

At the same time, during a conference call with analysts, John C. Martin, Gilead's president and chief executive officer, said the acquisition of Myogen will help Gilead build on its $365 million buyout of privately held Corus Pharma in August. "Our planned acquisition of Myogen represents both a scientific and strategic step," Martin said.

Shares of Myogen surged nearly 47% to end Monday's session at $51.44. Gilead's stock, meanwhile, fell $4.49, or 6.5%, to close at $64.28.

Gilead, with a market value of $29.2 billion, posted second-quarter net income of $265.2 million, or 56 cents per share, up 34% from $196 million, or 41 cents per share, in the previous second quarter. The company credited the rise to strong sales of its HIV treatments.

On the other hand, Myogen, which had a market value of about $2.2 billion as of Monday, posted a net loss of $18.5 million, or 44 cents a share, in the second quarter compared with a net loss of 21.7 million, or 61 cents a share, in the second quarter of Year 2005.

Gilead and Myogen expect the deal to close before the end of the current year.