Shedding a product to get a company

Bristol-Myers Squibb provides update on pending merger with Celgene, noting efforts to offload Otezla

Jeffrey Bouley
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NEW YORK—Sometimes you just have to let go. Well, in the case of the pending merger plans between Bristol-Myers Squibb Co. (BMS) and Celgene Corp. it’s actually more being told to get rid of something, but that’s kind of close.
Earlier this year, we (and many, many others) reported on the plans for BMS to acquire Celegene for around $75 billion, a deal that had been expected to close in the third quarter of this year. The respective boards of directors of the companies were already in agreement with the deal, and both companies have, in the intervening months, secured the approval of their shareholders as well.
That's not to say that the process was entirely smooth, however. Shortly after the announcement, one of BMS’ biggest shareholders, Wellington Management Company LLP, objected to the deal, as did a few other shareholders, like Starboard Value and Dodge & Co. But ultimately, the shareholder voting fell in favor of the merger.
However, there remains at least one snag—hardly insurmountable, but a snag nonetheless. BMS provided an update on the ongoing process, noting that “The company remains actively engaged in discussions with the U.S. Federal Trade Commission (FTC) on the FTC’s continued review of the proposed transaction. To allow the transaction to close on a timely basis in light of concerns expressed by the FTC, the company is planning the divestiture of Otezla (apremilast).”
As it happens, BMS has a TYK2 psoriasis drug in Phase 3 trials called BMS-986165 that would potentially be a rival to Otezla, which brought in $1.6 billion in 2018, up from $1.28 billion in 2017. That brought up the specter of antitrust concerns. There also had been some rumblings over at FTCWatch that a conflict might arise with a Celgene pipeline drug being developed with BeiGene that might compete with BMS’ drug Opdivo, but at least for now, Otezla seems to be the focus.
BMS also noted in its update that it and Celgene have concluded their pre-notification process with the European Commission, adding “and are pleased to confirm that they have today submitted the formal application for clearance by the European Commission ... Bristol-Myers Squibb is committed to working with regulatory authorities around the world on the proposed combination with Celgene. The company is focused on realizing the promise of the transaction, and is continuing to work to complete the transaction on a timely basis.”
Expectations are that finalization of the merger will more likely happen around the end of this year or early 2020, given the added wrinkle of needing to offload Otezla.
“Bristol-Myers Squibb reaffirms the significant value creation opportunity of the acquisition of Celgene. Together with $2.5 billion of cost synergies, a compelling pipeline and a strong portfolio of marketed products, the Company continues to expect growth in sales and earnings through 2025," BMS noted in a press release.

Jeffrey Bouley

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