Amgen Inc., the world's largest biotechnology company, gainedthe most in 17 months after the company said it's planning a $5billion share repurchase as part of a push to return profit tostockholders.

Amgen rose 5.9 percent Monday to $58.43 at the close in NewYork, the biggest single-day increase since June 2010. The sharesof the Thousand Oaks, California-based drugmaker have gained 6.4percent this year.

The modified Dutch auction, amounting to about 10 percent of thecompany, is part of a current $10 billion buyback program, Amgensaid in a regulatory filing today. The drugmaker will raise debt tohelp fund the program, part of a commitment to return at least 60percent of net income to investors, said Eric Schmidt, an analystwith Cowen & Co. in New York.

“This is a way to give money back to shareholders at a modestpremium,” Schmidt said in a telephone interview today.

Amgen declared its first quarterly dividend this year, of 28cents a share. The buyback offer starts tomorrow at a range of $54to $60 a share, and Amgen will have about $2 billion of net debtafterwards, said Mark Schoenebaum, an analyst with ISI Group in NewYork.

“This move is very good,” Schoenebaum wrote in a note to clientstoday. The company told him the timing was optimal because debt andAmgen stock are cheap, he said. “Recall Biogen did it in 2007,andit worked very well for the stock.”

A Dutch auction enables investors to specify a price at whichthey're willing to sell, and based on the number of shares tenderedand the specified prices, Amgen will find the lowest price pershare at which to buy $5 billion worth of stock, the company saidin a statement. Amgen will buy all the shares at the sameprice.

The drugmaker is trading at a multiple of about 12 timesearnings, compared with an average 13 times multiple for theStandard & Poor's 500 Index, according to Bloomberg data.

The company had $13.9 billion of long-term debt as of Sept. 30.It was downgraded today by Moody's Investors Service and FitchRatings, to Baa1 from A3 at Moody's and to BBB from A- at Fitch.Moody's had said last month that Amgen's ratio of debt to earningsbefore interest, taxes, depreciation and amortization was alreadyat the threshold for a downgrade from the A3 level.

Bond Sale

Amgen plans to sell three-, five-, 10- and 30-year bonds tofinance the share repurchases, the company said Monday in afiling with the Securities and Exchange Commission. Bank of AmericaCorp., Morgan Stanley, JPMorgan Chase & Co. and Citigroup Inc.are managing the debt offering, according to the filing.

Sales of Amgen's Neulasta and Neupogen, which are used to reducethe risk of infection in patients on chemotherapy, rose to $1.34billion during the third quarter, the company said last month. Thecompany's former core anemia therapies, Aranesp and Epogen, fell 16percent to $1.08 billion.

Biogen Idec Inc., based in Weston, Massachusetts, said in May2007 it would buy back $3 billion in shares through a modifiedDutch auction. The shares of Biogen, the world's largest maker ofmultiple sclerosis medicines, have more than doubled sincethen.

Sales of Biogen's MS therapy Avonex will rise 5.4 percent to$2.66 billion this year from $2.52 billion in 2010, according tothe average estimate of six analysts in a Bloomberg survey.

“This tender offer reflects Amgen's confidence in the futureoutlook of our business and the company's long-term value,” ChiefExecutive Officer Kevin Sharer said in the statement. “Our strongbalance sheet and cash flow enable us to complete this transactionin an attractive interest rate environment while also preservingthe flexibility to further accelerate the growth of our businessthrough focused, strategic acquisitions.”

Bloomberg News

Copyright 2018 Bloomberg. All rightsreserved. This material may not be published, broadcast, rewritten,or redistributed.