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Bristol-Myers' (BMY) Acquisition of Celgene Looks Certain
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Bristol-Myers Squibb Company’s (BMY - Free Report) acquisition offer for Celgene received a fresh lease of life following endorsement from two major advisory firms, Institutional Shareholder Services (“ISS”) and Glass Lewis. The completion of acquisition will make the deal the largest in the history of the pharmaceutical industry.
Glass Lewis and ISS advise large institutional investors in matters related to vote on proxy proposals as well as corporate governance. Both the firms have endorsed the strategic deal, which may lead to several institutional investors voting in favor of the deal on Apr 12.
Bristol-Myers’ shares have declined 8.2% so far this year against the industry’s gain of 4.9%.
We remind investors that Bristol-Myers announced in January that it will acquire Celgene for an equity value of approximately $74 billion or more than $90 billion including debt. The deal is expected to close in the third quarter of 2019. However, the deal faced major opposition from two of its large shareholders, Wellington and Starboard.
Starboard had urged all shareholders to support its proposal to vote against the deal. However, it has decided to withdraw the campaign following ISS and Glass Lewis’ support. Starboard, however, will go per its plans and vote against the deal as it believes the acquisition to be a loss-making deal.
Per Starboard’s argument, Bristol-Myers’ offer of one of its common stock and $50 for each Celgene’s shares is overpriced. Starboard is also skeptical about the success of pipeline candidates as portrayed by Bristol-Myers. Moreover, it raised questions on the performance of Bristol-Myers’ management.
Bristol-Myers expects the acquisition to create synergies with market leading portfolio of oncology and cardiovascular drugs. The merged entity will have nine blockbuster drugs in its marketed portfolio and is likely to generate $45 billion in cash flow in first three years. Bristol-Myers also expects to launch six products with blockbuster potential from the pipeline of the merged entity.
Bristol-Myers’ top drug, Opdivo, lags its competitors – Merck’s (MRK - Free Report) Keytruda and Roche’s (RHHBY - Free Report) Tecentriq – which are already approved in the lucrative first-line lung cancer. An acquisition, which can diversify its portfolio of marketed drugs and boost its pipeline, will change the course of the company’s share price movement. The company’s shares have been consistently declining for the past few years. However, the deal will add considerable debt to Bristol-Myers’ balance sheet.
We remain on the sidelines until the acquisition is complete and the synergies pan out as expected.
In addition to the stocks discussed above, wouldn't you like to know about our 10 finest buy-and-holds for the year?
From more than 4,000 companies covered by the Zacks Rank, these 10 were picked by a process that consistently beats the market. Even during 2018 while the market dropped -5.2%, our Top 10s were up well into double-digits. And during bullish 2012 – 2017, they soared far above the market's +126.3%, reaching +181.9%.
This year, the portfolio features a player that thrives on volatility, an AI comer, and a dynamic tech company that helps doctors deliver better patient outcomes at lower costs.
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Bristol-Myers' (BMY) Acquisition of Celgene Looks Certain
Bristol-Myers Squibb Company’s (BMY - Free Report) acquisition offer for Celgene received a fresh lease of life following endorsement from two major advisory firms, Institutional Shareholder Services (“ISS”) and Glass Lewis. The completion of acquisition will make the deal the largest in the history of the pharmaceutical industry.
Glass Lewis and ISS advise large institutional investors in matters related to vote on proxy proposals as well as corporate governance. Both the firms have endorsed the strategic deal, which may lead to several institutional investors voting in favor of the deal on Apr 12.
Bristol-Myers’ shares have declined 8.2% so far this year against the industry’s gain of 4.9%.
We remind investors that Bristol-Myers announced in January that it will acquire Celgene for an equity value of approximately $74 billion or more than $90 billion including debt. The deal is expected to close in the third quarter of 2019. However, the deal faced major opposition from two of its large shareholders, Wellington and Starboard.
Starboard had urged all shareholders to support its proposal to vote against the deal. However, it has decided to withdraw the campaign following ISS and Glass Lewis’ support. Starboard, however, will go per its plans and vote against the deal as it believes the acquisition to be a loss-making deal.
Per Starboard’s argument, Bristol-Myers’ offer of one of its common stock and $50 for each Celgene’s shares is overpriced. Starboard is also skeptical about the success of pipeline candidates as portrayed by Bristol-Myers. Moreover, it raised questions on the performance of Bristol-Myers’ management.
Bristol-Myers expects the acquisition to create synergies with market leading portfolio of oncology and cardiovascular drugs. The merged entity will have nine blockbuster drugs in its marketed portfolio and is likely to generate $45 billion in cash flow in first three years. Bristol-Myers also expects to launch six products with blockbuster potential from the pipeline of the merged entity.
Bristol-Myers’ top drug, Opdivo, lags its competitors – Merck’s (MRK - Free Report) Keytruda and Roche’s (RHHBY - Free Report) Tecentriq – which are already approved in the lucrative first-line lung cancer. An acquisition, which can diversify its portfolio of marketed drugs and boost its pipeline, will change the course of the company’s share price movement. The company’s shares have been consistently declining for the past few years. However, the deal will add considerable debt to Bristol-Myers’ balance sheet.
We remain on the sidelines until the acquisition is complete and the synergies pan out as expected.
Bristol-Myers Squibb Company Price
Bristol-Myers Squibb Company Price | Bristol-Myers Squibb Company Quote
Zacks Rank
Bristol-Myers currently has Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, wouldn't you like to know about our 10 finest buy-and-holds for the year?
From more than 4,000 companies covered by the Zacks Rank, these 10 were picked by a process that consistently beats the market. Even during 2018 while the market dropped -5.2%, our Top 10s were up well into double-digits. And during bullish 2012 – 2017, they soared far above the market's +126.3%, reaching +181.9%.
This year, the portfolio features a player that thrives on volatility, an AI comer, and a dynamic tech company that helps doctors deliver better patient outcomes at lower costs.
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