ImClone Systems (IMCL, $64.59, down $0.75) has responded to Bristol-Myers Squibb (BMY, $21.49, up $0.38) offer for a buyout of $4.9 billion and has said the bid is too low. The company said it is evaluating the deal, but has stated that it already feels it’s too low. The story gets interesting from here.

ImClone also stated that it has been considering splitting its Erbitux business into a separate business from the rest of its pipeline and is investigating whether Bristol-Myers Squibb had access to that information. There’s a growing concern, especially with Carl Icahn, that one of the board members who serves on both companies maybe have leaked this information out which means Bristol-Myers might have had access to confidential information.

ImClone didn’t name the board member but it’s not that hard to figure out. I’m not sure where this will go because tongues do like to waggle but one of the reasons ImClone wants to separate the business is because one of the drugs in it’s pipeline could have a “significant competitive effect” on Erbitux. If ImClone split, Bristol-Myers Squibb may not have any rights to market that drug.

ImClone’s went on to say that the company’s pipeline “may be extremely valuable and significantly increase stockholder value as a separate business.” Those sentiments echo that of Carl Icahn who, in case you didn’t know, controls publicly traded Icahn Enterprises LP (IEP, $64.20, down $0.55).

We closed half of the ImClone August 45 calls (QCIHI, $19.20, down $0.20) at $19.00 on Friday and they are still holding up well. Go ahead and set stops at $18.00 for the other half. These calls were profiled at $2.40 and may have a little more room to run with the response from ImClone that the offer is too low. However, the timing will be important because the calls will expire in a couple of weeks. A high offer may come but if it doesn’t come right away, the stop will protect our monster profits.

Rick Rouse
Rick@OptionsMentoring.com

]]>