BMS to Lilly re ImClone: "Thanks for the Cash, Suckers!"

Bristol-Myers Squibb CEO James M. Cornelius wrote this note today after the announcement that Eli Lilly and ImClone had agreed on the former's $6.5 billion, $70-a-share acquisition of the latter. Let's go through it line by line to see if there's a subtext, shall we?

After describing the deal in the first sentence, the next piece of information that Cornelius wants everyone to know is:

Bristol-Myers Squibb currently owns approximately 16.6 percent of all outstanding shares of ImClone. Based on Bristol-Myers Squibb's ownership of 14.4 million shares of ImClone, the transaction will be worth approximately $1 billion in cash to Bristol-Myers Squibb.

Translation: Thanks for the cash, suckers! Our cash position was always weaker than Lilly's (as BNET readers learned a few days ago), and that became important when the credit markets dried up because now there's no debt available to finance these things. That picture of me on the BMS web site shows me rubbing my hands with glee!

We are pleased to have initiated a process that has resulted in the substantial increase of ImClone's value for all of its stockholders.

Translation: After getting this thing rolling at $62 a share, we are pleased to have forced Lilly -- a more desperate company in terms of its patent cliff -- into over-paying for ImClone. And when we say "increase of ImClone's value for all its stockholders," we're referring specifically to the sled full of cash that Lilly CEO John Lechlieter must now give us. Mush, mush!

We are also proud to have contributed to this creation of value by providing commercial and R&D support to the company over the course of our relationship, which will continue now with Eli Lilly, a well-respected research organization.

Translation: Oh, right, nearly forgot. It's not just about money. It's all about the science. Yeah, that's right. The science.

From the beginning, we had viewed our potential acquisition of ImClone as a strategically and financially sound add-on to our oncology business, consolidating a successful relationship that has extended over seven years. We felt it was in the best interest of Bristol-Myers Squibb shareholders not to raise our previous $62/share all cash offer, exercising discipline and evaluating this potential investment within the context of other alternatives open to the company.

Translation: We know this sentence doesn't make sense, because if acquiring the company was "strategically and financially sound" then we should have done so. The "discipline" we're referring too is the fact that two credit rating agencies, Fitch and Moody's, sent shots across our bow earlier this year when they expressed caution about BMS doing this deal. Fitch said it "expects ... that the company will maintain financial discipline when considering a final purchase price." Moody's cut our rating and said "cushion in Bristol's current credit rating to pursue additional biotech investments is slim." Given the subsequent collapse in available financing for future deals, we were too scared to blow our remaining cash in a price war with Lilly, so we exercised "discipline" and chickened out.

Looking ahead, we will work closely with Eli Lilly and Company, a company I know well...

Translation: I already said they were well-respected. I'm not going to compliment those bastards twice.

... to continue to bring to patients not only ERBITUX(R), the important cancer therapy we co-commercialize in the U.S. and Canada with ImClone, and co-develop in Japan with Merck KGaA and ImClone, but other compounds, including IMC-11F8, under development by ImClone to which Bristol-Myers Squibb holds long-term marketing rights.

Translation: If you think buying us out of our stock means you're buying us out of all our future rights in ImClone, you've got another thing coming. I've already got lawyers looking at every line of every contract we've signed, so get ready for a fight.

P.S. Lilly is handing out cash left, right and center these days. Check out these other deals it has signed:

Where is all this cash going to come from? Turns out that even though Carl Icahn said the deal was not subject to financing, it actually was. The AP reports that Lilly is paying with $3 billion in debt. So some part of the credit market is still working.

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