Celgene to buy Abraxis in $2.9 billion cash and stock deal, bagging the latter's cancer drug Abraxane

Celgene says it has agreed to acquire fellow USA-based Abraxis BioScience, to expand its oncology portfolio and establish the blood cancer specialist in the solid tumors sector of the market. Reacting to the news, in morning trading yesterday Abraxis shares leapt 22% to $74.53 by mid-day trading yesterday, while Celgene slipped 3.8% to $51.21.

Under the terms of the merger deal, each share of Abraxis common stock will be converted into the right to receive an upfront payment of $58.00 in cash and 0.2617 shares of Celgene common stock, representing a 17% premium to Abraxis' closing price on June 29. The upfront payment values Abraxis BioScience at approximately $2.9 billion, net of cash. Each share will also receive one tradeable Contingent Value Right (CVR), which entitles its holder to receive payments for future regulatory milestones and commercial royalties. The transaction is expected to be modestly dilutive to non-GAAP earnings in 2011 and accretive in 2012 and beyond.

The acquisition of Abraxis accelerates Celgene's strategy to become a global leader in oncology. The transaction adds Abraxane (paclitaxel protein-bound particles for injectable suspension) (albumin-bound) to the company's existing portfolio of leading cancer products.