09/10/2008: Eli Lilly & Co. (NYSE:LLY) / Imclone Systems Inc. (NasdaqGS:IMCL)

2008 Deals You Should Know – Eli Lilly / Imclone

Eli Lilly agreed to acquire ImClone Systems, the biotechnology company that is controlled by Carl C. Icahn and whose stock was involved in the insider trading scandal that sent Martha Stewart to jail.

The deal by Lilly, worth $70 a share, beat out an offer of $62 a share from Bristol-Myers Squibb, which markets ImClone’s cancer drug Erbitux in the United States along with ImClone.

Consolation prize for Bristol-Myers: The $70-a-share offer means Bristol-Myers will get about $1 billion in cash for its nearly 17 percent stake in ImClone.

The acquisition was the biggest ever for Lilly, which is based in Indianapolis, and represents an aggressive move into cancer drugs and biotechnology.

The deal will make Lilly a “true oncology powerhouse,” John C. Lechleiter, Lilly’s chief executive, told analysts on a conference call the Monday following the announcement.

But some felt that while the deal made strategic sense for Lilly in the long run, the price paid was expensive as Lilly projected that the deal would not add to its earnings per share until 2013.