Thousand Oaks biotech giant Amgen Inc. said it will buy back up to $5 billion of its common stock, causing its share price to jump in morning trading.
The drug maker said it would purchase the shares for between $54 and $60 each in a buyback program known as a modified Dutch auction tender offer. Using the model, shareholders will say how many shares they want to tender and the amount within Amgen’s range they’re willing to pay.
The company then will set a price, paying the same amount for all shares.
The auction will start Tuesday and end Dec. 7. Amgen also said it would raise debt to fund the tender offer and “for general corporate purposes.”
"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," Chief Executive Kevin W. Sharer said in a statement.
The announcement, part of Amgen’s $10-billion buyback program, sent the company’s stock up to $58.35 early Monday before it slipped back to $57.60 midday. The stock closed Friday at $55.17.
But credit ratings agencies Moody’s Investor Service and Fitch Ratings both downgraded the company’s debt. Moody’s pushed down the rating to Baa1 from A3, while Fitch sent its rating to BBB from A-.
Standard & Poor’s kept Amgen at it’s A+ rating.
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-- Tiffany Hsu
Photo: Paul Sakuma / Associated Press
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