Amgen (NASDAQ: AMGN) today announced its plan to launch a modified Dutch auction tender offer to purchase up to $5 billion of its common stock, par value $0.0001 per share ("Common Stock"). Amgen also announced a public offering of its senior notes, the proceeds of which will be used to fund the tender offer and for general corporate purposes.
"This tender offer reflects Amgen's confidence in the future outlook of our business and the Company's long-term value," said Kevin W. Sharer, Chairman and CEO at Amgen. "Our strong balance sheet and cash flow enable us to complete this transaction in an attractive interest rate environment while also preserving the flexibility to further accelerate the growth of our business through focused, strategic acquisitions."
Modified Dutch Auction Tender Offer
Amgen will offer to purchase up to $5 billion of Common Stock at a price not greater than $60.00 nor less than $54.00 per share. In accordance with the rules of the Securities and Exchange Commission (SEC), Amgen may increase the number of shares of stock accepted for payment in the offer by no more than 2 percent of the outstanding stock without amending or extending the offer. On Nov. 4, 2011, the closing price of Common Stock was $55.17 per share. The tender offer is expected to commence tomorrow, Nov. 8, 2011, and will expire at 12:00 a.m. EST, on Dec. 7, 2011, unless extended.
A modified Dutch auction tender offer allows stockholders to indicate how much stock and at what price within the range described above they wish to tender their stock. Based on the number of shares tendered and the prices specified by the tendering stockholders, Amgen will determine the lowest price per share that will enable it to purchase $5 billion of Common Stock at such price, or a lower amount depending on the number of shares that are properly tendered and not properly withdrawn. All stock purchased in the tender offer will be purchased at the same price, even if the stockholder tendered at a lower price, so in some cases Amgen may purchase stock at a price above the price indicated by the stockholder tendering that stock. Amgen will not purchase stock below a stockholder's indicated price. If the tender offer is fully subscribed, then $5 billion of Common Stock at the purchase price determined by Amgen will be purchased (subject to Amgen's above-referenced ability to increase such numbers of shares), representing approximately 9.5 percent to 10.6 percent of outstanding Common Stock as of Nov. 7, 2011.
If, at the final purchase price, shares representing more than $5 billion of Common Stock at the applicable purchase price (or such greater number of shares as Amgen may choose to purchase without amending or extending the offer) are properly tendered and not properly withdrawn, Amgen will purchase stock tendered at or below that price on a pro rata basis. The tender offer will not be conditioned upon any minimum number of shares being tendered, but will be subject to the completion of the senior notes offering described below and the completion of additional financing sufficient to fund the purchase of shares under the tender offer, as well as other conditions described in the tender offer documents, which will be distributed to stockholders shortly. These documents will also contain tendering instructions and a complete explanation of the tender offer's terms and conditions.
While Amgen's Board of Directors has authorized the Company to make the tender offer, neither Amgen nor its Board of Directors make any recommendation to any stockholder as to whether to tender or refrain from tendering any stock or as to the price or prices at which stockholders may choose to tender their stock. Amgen has not authorized any person to make any such recommendation. Stockholders must decide whether to tender their stock and, if so, how much stock to tender and at what price or prices. In doing so, stockholders should carefully evaluate all of the information in the tender offer documents, when available, before making any decision with respect to the tender offer, and should consult their own financial and tax advisors.
The tender offer will be made under Amgen's $10 billion stock repurchase program announced on Oct. 24, 2011. Future repurchases under the program are expected to be executed through private block purchases and market transactions. The Company expects to engage in financing activity, including the senior notes offering announced today, to fund repurchases. Future funding may include issuance of additional senior notes (denominated in U.S. or foreign currencies), term debt and/or commercial paper.
The tender offer described in this release has not yet commenced.