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Lilly and ImClone face court proceedings

Eli Lilly & Co and ImClone have refuted claims that the board of the US-based vaccines manufacturer breached fudiciary duties to investors

Eli Lilly & Co and ImClone have refuted claims that the board of the US-based vaccines manufacturer breached fudiciary duties to investors by agreeing to $6.5bn takeover deal by Lilly.

A Maschusetts pension fund and several individual shareholders launched legal action against ImClone to block its acquisition by Lilly in a filing to the US Securities & Exchange Commission on October 27.

The lawsuit seeks class action status on behalf of all ImClone stockholders and an injunction blocking the deal from going ahead until investors are given more information about the acquisition. Many investors believe that they were not given sufficient information about the deal prior to be asked to tender their shares.

A court hearing, in which Lilly and ImClone will defend themselves has been scheduled.

Agreed deal
In early October, Lilly made an offer of $70 net per share for all outstanding shares of ImClone Systems – a bid that represents a 51 per cent premium on ImClone's closing stock price on July 30, the day before the vaccine maker's long-term marketing partner Bristol-Myers Squibb's (BMS) made public its offer.

At the time, ImClone board members were said to have unanimously backed the deal, believing it to be "fair to, and in the best interests of, ImClone and its shareholders" and recommended that holders of shares in ImClone common stock accept the deal and tender their shares in the offer.

There is no financing condition to the tender offer, but it is subject to certain conditions set forth in the Offer of Purchase. Unless the tender offer is extended, the offer and any withdrawal rights to which ImClone's shareholders may be entitled will expire at midnight (EST) on November 20, 2008.

On completion of the deal, ImClone will become a wholly-owned subsidiary of Eli Lilly & Co.

The agreed offer comfortably outstripped the already enhanced $62-per-share bid from BMS, which has a 17 per cent stake in the company. 

28th October 2008

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