Celgene bids $2.9B for Pharmion; deal includes predicted blockbuster Vidaza

Celgene has signed a definitive merger agreement to acquire fellow USA-based Pharmion for $2.9 billion in cash and shares in order to gain control of Vidaza (azacitidine). Earlier this year (Marketletter August 13), the drug became the first to extend median survival in myelodysplastic patients, prompting analysts to predict blockbuster status.

Celgene will acquire all of the outstanding shares of Pharmion common stock for $72.00 per share, payable in a combination of cash and shares of Celgene common stock. The transaction is expected to be slightly dilutive to earnings in 2008 and accretive in 2009 and beyond, and has been unanimously approved by the boards of directors of both companies. However, the deal is still subject to the approval of Pharmion stockholders, as well as antitrust clearances. Under the terms of the agreement, each share of Pharmion common stock will be exchanged for $25.00 in cash and Celgene common stock in an amount to be determined by an exchange ratio.

If the volume-weighted average price per share of Celgene common stock for the 15 consecutive trading days ending on the third trading day before the merger closing date is between $56.15 and $72.93, then the exchange ratio will be equal to $47.00 divided by the VWAP closing price. If this is less than $56.15, Pharmion stockholders will receive 0.8370 Celgene shares for each share of Pharmion common stock, and if the VWAP closing price is greater than $72.93, Pharmion stockholders will receive 0.6445 Celgene shares for each share of Pharmion common stock. The cash portion of the transaction is being funded by the firm's cash on hand. Upon the closing of the acquisition, Pharmion stockholders will own approximately 6% of Celgene's outstanding common stock.