Bristol-Myers Completes Acquisition

Bristol-Myers Squibb Co. (BMY) yesterday announced the completion of the $2.4 billion acquisition of Medarex, Inc.  Following the completion of the deal, Medarex has become a wholly-owned subsidiary of Bristol-Myers. The deal was funded by Bristol-Myers from available cash.
 
The merger became effective on Sept 1. Consequently, the acquired entity will not trade on the Nasdaq Stock Market from Sept 2.
 
As a reminder, Bristol-Myers initiated a cash tender offer to buy all outstanding shares of common stock of Medarex for $16.00 per share on July 28. The period expired on Aug 26 and the subsequent offering period ended on Aug 31. Approximately 90.7% of Medarex’s outstanding shares were tendered in favor of Bristol’s cash tender offer.
 
Bristol-Myers acquired the remaining outstanding shares of Medarex common stock through a “short form merger”. The shares were converted into the right to receive $16.00 per share, in cash and without interest, less any required withholding taxes.
 
With the Medarex acquisition, Bristol-Myers now has access to the UltiMAb Human Antibody Development System, which produces high affinity, fully human antibodies for use in a broad range of therapeutic areas, including immunology and oncology. Bristol-Myers has also acquired Medarex’s next-generation Antibody-Drug Conjugate (ADC) technology, which is a novel and proprietary platform that could open new fields in oncology drug development.
 
Importantly, Bristol-Myers acquired full ownership and rights to ipilimumab, which was being developed jointly by Bristol-Myers and Medarex. Ipilimumab, which ifs in late-stage clinical testing, could be a significant contributor to the company’s future growth on approval.
 
The acquisition of Medarex is aimed to counter the loss of revenues that will arise once Bristol-Myers loses exclusivity on its key product Plavix in 2011. Moreover, Plavix is facing competition from Eli Lilly’s (LLY) Effient which was launched recently. Additionally, Bristol-Myers is working to build a strong pipeline of candidates that could contribute to revenues in the coming years. Further, Bristol-Myers' management is aiming to reduce costs and is shedding less profitable and non-core businesses.
 
We currently have an Outperform rating on the stock.

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