Digital Biogen auction announcement puts Big Pharma on alert

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Digital Biogen Idec, the US biotech giant, put itself up for sale last night, launching an auction that is sure to attract interest from many of the world's largest pharmaceuticals companies.

The board reluctantly agreed to begin examining the possibility of a sale after getting an informal bid from the billionaire investor Carl Icahn, whose current small shareholding soared in value in after-hours trading.

The news came just hours after another of Mr Icahn's investments, the business software maker BEA Systems, leapt 38 per cent after a hostile $6.7bn bid from its bigger rival Oracle.

The 71-year-old Mr Icahn is the 18th richest American, according to Forbes magazine, with a fortune estimated at $14.5bn. His stakebuilding in Biogen was first disclosed in August, when he had amassed less than 1 per cent but indicated he planned to buy more.

The company said last night that Mr Icahn was one of several parties to have indicated an interest in buying the company, whose market value was $23.5bn after the shares leapt more than 17 per cent in after-hours trading.

In a statement, it said the board expressed confidence in its outlook as a standalone company, but added: "Nevertheless, to determine whether potential strategic interest on the part of major pharmaceutical companies might result in superior value in the current environment, the board has authorised management to explore interest in a transaction."

Goldman Sachs and Merrill Lynch will run the auction.

Last month, Biogen promised to double its earnings per share by 2010, confident in the outlook for its multiple sclerosis drug Tysabri, which was reintroduced to the market last year after assuaging safety concerns that prompted an earlier product recall. Shares in Elan, the Irish drug maker which co-developed Tysabri, also jumped last night, amid hopes that a big pharmaceuticals company might put additional marketing resources behind Tysabri if it acquires Biogen, or may ultimately also bid for Elan.

Bigger pharmaceuticals companies have been clamouring to bulk up their biotechnology business.