When Bristol-Myers Squibb announced its bid to buy its partner ImClone, a lot of people asked, Why now? ImClone's stock is a lot higher now than it was a couple of years ago. So if BMS didn't make an offer then, why would it pay more today? Apparently, the answer lies in the successor to the partnership's successful cancer med Erbitux--and in some contract language vague enough to give ImClone a claim to full rights to it.
Bristol says it's entitled to a piece of Erbitux the second, known as IMC-11F8. The companies' 2001 agreement stipulates that if this next-generation med was derived in any way from the original Erbitux, or if it's a competing product, BMS gets its share. But ImClone says Bristol's out of the picture (after saying it was in some time back, but you'll have to read the Wall Street Journal's story to get the details).
The disagreement could end up in a years-long slog through arbitration. Or BMS could buy ImClone and avoid all that, hence the $4.5 billion offer for the 83 percent of ImClone that Bristol doesn't already own. But BMS may have to raise its price. The market is still betting on a higher bid; ImClone stock closed Friday at almost $64.