Bristol-Myers Squibb and AstraZeneca have teamed up to buy diabetes specialist Amylin Pharmaceuticals in a deal worth $7.00 billion.

Initially, it is B-MS that is the acquirer, forking out $5.30 billion in cash, or $31.00 per share, to purchase Amylin and its diabetes drug Byetta (exenatide) and its once-weekly successor Bydureon. It is also paying another $1.7 billion in debt to fulfil a contractual obligation to Eli Lilly, which was Amylin’s former partner for the two aforementioned drugs.

Once that merger closes, AstraZeneca, which already has a major diabetes partnership with B-MS covering Onglyza (saxagliptin), Kombiglyze (saxagliptin and metfomin) and Forxiga (dapagliflozin), enters into the equation. The Anglo-Swedish drugmaker will then pay $3.40 billion for 50% of the profits from Amylin’s drugs and it also has the option of giving B-MS another $135 million "to establish equal governance rights over key strategic and financial decisions regarding the collaboration".

Lamberto Andreotti, B-MS chief executive, said “Amylin’s innovative diabetes portfolio, talented people and state-of-the art manufacturing facility complement our long-standing leadership in metabolics". The company will now have a glucagon-like peptide 1 (GLP-1) franchise with Byetta and Bydureon to go with the dipeptidyl peptidase IV (DPP-4) inhibitor Onglyza and the selective sodium glucose co-transporter 2 (SGLT-2) inhibitor Forxiga, he noted, adding that the deal "is also a unique way" for B-MS and AstraZeneca to expand their alliance.

Interim CEO at AstraZeneca, Simon Lowth, said the arrangement "is a compelling proposition that will have an immediate positive impact on revenues". He added that "the combined development, regulatory and commercial strengths" of the two majors' alliance "provides an excellent platform to unlock the potential of Amylin’s differentiated treatments".

The future of Amylin has been up for discussion since April when it was reported that a hostile $3.50 billion, or $22 per share, bid from B-MS had been rejected. The US firm's management, which was criticised by billionaire investor Carl Icahn for turning down B-MS' initial offer, signed up Credit Suisse and Goldman Sachs to sound out potential buyers.

Chief executive Daniel Bradbury noted that "over the last several months", the board has been "actively engaged in a robust and thorough strategic process designed to maximise the value of our unique diabetes franchise. I strongly believe that we have accomplished that objective".

So B-MS and AstraZeneca have won out in a process in which the likes of Sanofi, Merck & Co, Takeda, Pfizer and Roche were all mentioned as potential bidders. However, the size of the price paid has raised eyebrows among some observers.