Global pharmaceutical major Bristol-Myers Squibb and AstraZeneca have teamed up to buy Amylin Pharmaceuticals, a biopharmaceutical company for $7 billion.

Amylin, headquartered in San Diego, California, specialises in delivering novel therapies for diabetes and other metabolic disorders.

As per the deal, Bristol-Myers Squibb will acquire Amylin for $31 per share in cash, pursuant to a cash tender offer and second step merger, for an aggregate purchase price of approximately $5.3 billion. The offer price is a 10 per cent premium to Amelyn's closing share price on Friday.

The total value of the transaction, including Amylin's net debt and a contractual payment obligation to Eli Lilly & Company, together totaling about $1.7 billion, is approximately $7 billion.

Amylin had last month rejected a $3.5 billion, $22 a share, unsolicited takeover offer from Bristol-Myers Squibb (See: Amylin reportedly rejects Bristol-Myers $3.5-bn bid)

Bristol-Myers said that it s now paying nearly $2 billion more than its February offer, since it had then made the offer from whatever information was publicly available on Amylin.

As part of the transaction's terms, Amylin has agreed not to seek out higher bids.

Following the completion of Bristol-Myers Squibb's acquisition of Amylin, AstraZeneca will make a payment to Amylin, as a wholly owned subsidiary of Bristol-Myers Squibb, of approximately $3.4 billion in cash for 50 per cent of the profits from Amylin's drugs, and plans to exercise an option that will give them a 50 per cent share in deciding how Amylin's existing and experimental drugs are managed.

''Amylin's innovative diabetes portfolio, talented people and state-of-the art manufacturing facility complement our longstanding leadership in metabolics,'' said Lamberto Androitti, chief executive officer, Bristol-Myers Squibb.

''It is a novel, creative deal to come together to fight a major epidemic that affects 280 million people, and one out of 10 Americans,'' says Elliot Sigal, the chief scientific officer of Bristol-Myers Squibb.

Simon Lowth, interim chief executive officer of AstraZeneca, said, ''This is a compelling proposition that will have an immediate positive impact on revenues and is fully in line with our stated partnering strategy to enhance top-line growth and strengthen our late stage pipeline''.

''We are pleased to announce this transaction that provides substantial value for Amylin shareholders,'' said Daniel M Bradbury, president and chief executive officer of Amylin.

Amylin's assets include treatments for type 2 diabetes, Byetta injection and Bydurion, Metreleptin, a leptin analog currently under review at the US Food and Drug Administration (FDA) for the treatment of diabetes, and Symlin for the treatment of type 1 and type 2 diabetes.

Byetta generated $517.7 million in 2011 for Amylin, accounting for 83 per cent of the company's $621.6 million product sales in 2011. Symlin had modest sales of $103.9 million in 2011.

The company received the US Food & Drug Administration approval in January for Bydureon, a once-weekly formulation of its earlier Type 2 diabetes drug Byetta, a longer-lasting version of Byetta, which is injected twice a day.

Bydureon is expected to have annual sales of $1 billion over the medium term, and its main competitor is Novo Nordisk's Victoza, which had sales of $1.1 billion in 2011.

Bristol-Myers Squibb will finance the acquisition from its existing cash resources and credit facilities.

Founded in 1987, Amylin focuses on creating of therapies for the treatment of diabetes, obesity, and other metabolic diseases.

Amylin also sells insulin drug Symlin for Type 1 or Type 2 diabetes.

It was talking to Takeda Pharmaceuticals of Japan, Sanofi of France and Merck & Co of the US as marketing partner to sell Bydureon and Byetta outside the US.

London-based AstraZeneca already collaborates with Bristol-Myers for developing and selling several of the US company's developed drugs. Both of them had developed a new drug, Onglyza, and a combination pill, Kombiglyze, which together generated $473 million last year.

AstraZeneca is essentially paying $3.5 billion for 50 per cent of the profits from Amylin's drugs, with an option that will give them a 50 per cent share in deciding how Amylin's existing and experimental drugs are managed.

The acquisition of Amylin is Bristol-Myers' 'string-of-pearls strategy' adopted in 2007, which the company had explained is a highly targeted set of transactions designed to expand its experimental drugs pipeline.

The acquisition of Amylin is the sixth since 2007 when the strategy was put in place. The largest deal prior to Amylin was the $1.98-billion acquisition of New Jersey-based experimental biological drug company Medarex in 2009.

But in the same year, Bristol-Myers Squibb failed to acquire a minority stake in neuroscience-based biotechnology company Elan Corporation Plc, which would have led to the US pharmaceutical major acquiring the Irish firm in a multi billion pound deal in the future.

It also lost out to Eli Lilly in its bid to acquire US-based biotechnology company ImClone Systems, when it was outbid by Eli Lilly $6.5 billion offer.

Bristol-Myers Squibb had in January bought Inhibitex Inc for about $2.5 billion in cash in order to expand its broad hepatitis C portfolio (Bristol-Myers to acquire hepatitis C oral drug developer Inhibitex for $2.5 bn).

The board of directors of Bristol-Myers Squibb had on June 26 declared a quarterly dividend of 34 cents ($0.34) per share, payable on 1 August 2012.