Bristol-Myers Squibb Bets Big On Celgene In $74B Cash And Stock Deal

Bristol-Myers Squibb Co BMY, which was an underperformer among large-cap pharma stocks in 2018, made a big move in the new year as it struggles to get its acts straight.

What Happened

Bristol-Myers Squibb on Thursday announced an agreement to buy Celgene Corporation CELG in a cash and stock deal, with an equity valuation of $74 billion.

Celgene shareholders will receive one Bristol-Myers Squibb share and $50 in cash for each share they hold in Celgene. Additionally, Celgene shareholders also stands to receive one tradable contingent value right, or CVR, for each Celgene share, entitling them to receive a payment for achievement of future regulatory milestones.

The terms value each of Celgene shares at $102.43 and one CVR. The cash and stock consideration alone represents a 54 percent premium to Celgene's closing price Jan. 2. The boards of both companies approved the transaction.

Incidentally, Celgene paid $9 billion to buy Juno Therapeutics last year in a bid to prop up its oncology franchise.

Why It's Important

The combined company will have complementary product portfolios in oncology, immunology and inflammation, cardiovascular franchises, with nine products boasting of over $1 billion in annual sales.

The companies also have near-term launch opportunities having over $15 billion in sales potential, which include TYK2 and ozanimod in immunology and inflammation, luspatercept, liso-cel, bb2121 and fedratinib in hematology.

The deal is expected to ring in cost synergies of about $2.5 billion annually by 2022.

What's Next

The consummation of the deal is subject to the approval of shareholders of both companies, as well as satisfaction of customary closing conditions and regulatory approvals.

The companies expect the deal to close in the Q3 2019.

In pre-market trading, Celgene shares were soaring 31.95 percent to $87.93 and Bristol-Myers Squibb was down 14.93 percent to $44.60.

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