Eli Lilly agrees to buy ImClone for $6.5 billion

By Toni Clarke and Jessica Hall

BOSTON (Reuters) - Eli Lilly and Co has agreed to acquire ImClone Systems Inc for $6.5 billion, potentially bringing to a close one of the most colorful corporate sagas in biotech history.

The deal, announced by the companies on Monday, values ImClone at $70 per share, a premium of 51 percent to ImClone's closing price on July 30, the day before ImClone's partner, Bristol-Myers Co, made an offer of $60 a share for the 83 percent of the company it does not already own.

The question now is whether Bristol, which later sweetened its offer to $62 a share, will come back with a counter-offer.

"Bristol is very keen on acquiring this company," said Eric Schmidt, an analyst at Cowen & Co. "I think the Lilly thing probably came to them out of left field and I'm not sure that they are going to take it lying down."

Bristol declined to comment.

Whoever is the ultimate buyer, an acquisition of ImClone will mark the end of a corporate soap opera that included the jailing of founder Samuel Waksal and style guru Martha Stewart in a stock trading scandal.

It also represents a satisfying victory for Carl Icahn, the billionaire investor and chairman of ImClone's board, who took control of ImClone in 2006 at a time many investors had written the company off and almost no analysts were recommending the stock.

Investors who stuck with ImClone since Bristol took its stake in the company seven years ago -- for $70 a share, no less -- have seen ImClone's shares fall as low as $6 and rise as high as $87.