ImClone Systems Inc has agreed to be acquired by Eli Lilly and Co for about $6.1 billion after rebuffing a sweetened takeover offer from Bristol-Myers Squibb sources familiar with the situation.

The agreement, which values ImClone at $70 per share, has been approved by the boards of both ImClone and Eli Lilly, sources said. ImClone shares closed on Friday at $64.96. Last week, Eli Lilly made a formal offer to buy ImClone, which makes the cancer drug Erbitux, for $70 a share, topping Bristol-Myers' offer of $62 per share for the 83 percent of ImClone it does not already own.

After rejecting Bristol-Myers, ImClone's Chairman Carl Icahn had stoked interest about a new suitor and said a "mystery bidder" was in talks to acquire ImClone. ImClone said last week negotiations with the "mystery bidder" were continuing but the name of the suitor was not revealed. Reuters and other media outlets reported Eli Lilly as the "mystery bidder." The negotiations with Eli Lilly led to a formal merger agreement, which includes a so-called "no shop" provision that prevents ImClone from actively soliciting superior offers, sources said.

ImClone and Eli Lilly could not be immediately reached for comment. Bristol-Myers declined to comment.  The $70 per share offer would represent 51-percent premium to ImClone's closing price prior to the first $60 a share offer from Bristol-Myers and hovers near the high end of premiums paid historically in similar acquisitions, Rodman & Renshaw analyst Michael King previously said.

Cancer is one of the three main areas of research focus at Eli Lilly, along with diabetes and neuroscience. Eli Lilly's has a robust oncology business, but its largest product, Gemzar, loses patent protection in 2012. Like other major pharmaceutical companies facing competition from generic drug rivals, Eli Lilly also faces the risk of slower growth due to the pending patent expiry of its schizophrenia drug, Zyprexa.

One key question regarding the fate of ImClone is the follow-on product to its cancer drug Erbitux, which is known as 11F8. Bristol-Myers previously has said it has the rights to that product, but ImClone has disputed that.

A takeover of ImClone would mark the end of one of the most colorful corporate sagas in biotech history, complete with the jailing of founder Sam Waksal and his friend Martha Stewart, the style guru caught for lying to investigators over her suspicious trading in ImClone stock. Investors who have stayed along for the ride have seen the company's shares swing as low as $6 and as high as $87. They endured a protracted boardroom battle as billionaire investor Carl Icahn and his associates ousted the company's previous board and revived the company's tattered relationship with Bristol-Myers, which markets Erbitux in the United States