Indianapolis-based Lilly said it will pay $70 per share for New York-based ImClone.
"We really do create an oncology powerhouse," Lilly CEO John Lechleiter said this morning in an interview on CNBC.
ImClone previously had rejected as too low two takeover offers from New York-based Bristol-Myers Squibb Co., its marketing partner for the cancer drug Erbitux. Bristol-Myers made bids of $60 and later of $62 per share.
ImClone says Chairman Carl Icahn, who owns about 14 percent of ImClone stock, has agreed to vote in favor of the Lilly deal.
The deal is one of the biggest acquisitions in the history of Lilly, which has shunned big acquisitions in the past.
In 2007, ImClone posted a profit of $40 million on revenue of $590 million.