Bristol-Myers Squibb buying Celgene in $74 billion deal

Logo of global biopharmaceutical company Bristol Myers Squibb

Global pharmaceutical giant Bristol-Myers Squibb is set to take over US-based Celgene for a record-breaking US$74 billion, according to a Bloomberg report on December 4. The company had revenue of $5.69 billion for the quarter, compared to analyst estimates of $5.72 billion.

On Thursday, Bristol's stock was off another 14 percent at $44.77.

In the deal, Bristol-Myers Squibb gains Celgene's blockbuster Revlimid treatment for multiple myeloma. "Combining with Bristol-Myers Squibb, we are delivering immediate and substantial value to Celgene shareholders and providing them meaningful participation in the long-term growth opportunities created by the combined company", said Mark Alles, chairman and chief executive officer of Celgene. Inc.'s holdings in Bristol-Myers Squibb were worth $1,379,000 at the end of the most recent reporting period.

Under the deal, shareholders in Celgene will receive one Bristol-Myers share plus $50 in cash, valuing Celgene stock at $102.43 based on the January 2 closing price of Bristol-Myers stock.

A large in-house Bristol-Myers Squibb legal team also worked on the matter.

BMS has valued Celgene shares at US$102.43 apiece, a 54 percent premium to the stock's closing price on January 2.

Celgene shareholders will also receive a so-called CVR payment, or contingent value right, of $9 if three treatments in development achieve timely approvals. They include two vehicle T-cell therapies that Celgene acquired when it bought biotech company Juno Therapeutics for $9 billion previous year, a small-molecule drug for the blood cancer myelofibrosis, and a protein therapeutic being investigated in patients with myelodysplastic syndromes-a group of blood cancers-as well as in patients with the inherited blood disorder β-thalassemia.

It also TYK2 and ozanimod in immunology and inflammation, and two more in haematology: luspatercept and fedratinib.

Revlimid is expected to bring in almost $10 billion in revenue for 2018 and is the backbone of new combination multiple myeloma treatments. The investment community uses this figure to determine a company's size, as opposed to using sales or total asset figures.

That torrid growth has an expiration date, however.

Celgene has laid out the expectation for a trial decision as early as late 2019 and an appeal decision as early as 2021.

Analysts await Bristol-Myers Squibb Company (NYSE:BMY) to report earnings on February, 4. "As you expect, we evaluated a range of potential outcomes and we feel very good about the valuation".

Celgene's shares rocketed in premarket trading Thursday morning on the deal news, soaring around 32 percent to $88.80.

Investors in the pharma did not appear enthusiastic about the proposed takeover, however. The Massachusetts-based Adage Prns Grp Inc Limited Liability Company has invested 0.24% in Bristol-Myers Squibb Company (NYSE:BMY).

Celgene shares traded up by more than 25%.

The deal, which would unite the resources of two of the world's pioneers in the treatment of cancer, cardiovascular disease and other maladies, is expected to close in the third quarter of 2019, subject to antitrust and regulatory approval.

If completed, the acquisition would have a competitive impact across the industry, particularly in oncology. FDx Advisors Inc. now owns 34,659 shares of the biopharmaceutical company's stock valued at $2,152,000 after purchasing an additional 26,984 shares during the last quarter.

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