Bristol-Myers Squibb Co. is starting a tender offer to buy all of the outstanding shares of diabetes drug maker Amylin Pharmaceuticals Inc.
Late last month, Bristol-Myers Squibb said that it planned to buy San Diego-based Amylin for approximately $5 billion in cash. The company said that it would pay $31 for each Amylin share. That's a 10 percent premium over the price of Amylin's closing stock price on June 29, just prior to the deal being announced.
Including Amylin's debt and a payment to Amylin's former marketing partner Eli Lilly & Co., the deal is worth about $7 billion.
Amylin will become a Bristol-Myers Squibb subsidiary once the tender offer closes.
Bristol-Myers previously announced that after the acquisition is complete that it will enter into an alliance with British drugmaker AstraZeneca to develop and commercialize Amylin's diabetes drugs. AstraZeneca will pay Bristol-Myers $3.4 billion in cash, and the companies will share profits and losses.
Bristol-Myers biggest sellers include the oral diabetes treatment Onglyza, and the psychiatric drug Abilify. Bristol-Myers markets blood thinner Plavix through a partnership with French drugmaker Sanofi, and while Plavix is the second-best selling drug in the world, it lost U.S. patent protection in May.
Amylin makes the twice-a-day diabetes drug Byetta and a newer once-a-week version called Bydureon. Both drugs were marketed through a partnership with Eli Lilly and Co., but the companies announced in November that they were ending their partnership. Amylin said then it was looking for a new partner to help sell the drugs.
Amylin also makes the diabetes drug called Symlin.
The tender offer is set to expire on Aug. 7, unless extended.
Shares of Amylin gained 7 cents to $30.74 in premarket trading on Tuesday. Bristol-Myers shares closed Monday at $35.02 and were not trading premarket.