Starting the year off with a bang

NEW YORK & SUMMIT, N.J.—A pharma giant is going to get even bigger this year, as Bristol-Myers Squibb Company buys up Celgene Corporation for a total deal value of roughly $74 billion. The companies inked a definitive merger agreement, announced on January 3, that states that Bristol-Myers Squibb will grant 1.0 BMS share and $50 in cash to Celgene stockholders for each share of Celgene. The latter's shareholders will also receive one tradable Contingent Value Right for each share of Celgene, which entitles them to receive a payment if future regulatory milestones are met. Upon completion of the deal, which is subject to shareholder approval and customary closing conditions, Bristol-Myers Squibb stockholders will likely own about 69 percent of the combined company, while Celgene stockholders will hold roughly 31 percent.

Both companies' boards of directors have approved the transaction, which is expected to close in the third quarter of the year. Morgan Stanley & Co. LLC is serving as Bristol-Myers Squibb's lead financial advisor, with Evercore and Dyal Co. LLC also serving as financial advisors. Bristol-Myers Squibb has secured Kirkland & Ellis LLP as its legal counsel. J.P. Morgan Securities LLC is serving as lead financial advisor and Citi is acting as financial advisor to Celgene for this transaction, with Wachtell, Lipton, Rosen & Katz as legal counsel.

“For more than 30 years, Celgene’s commitment to leading innovation has allowed us to deliver life-changing treatments to patients in areas of high unmet need. 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,” Mark Alles, chairman and CEO of Celgene, remarked in a press release. “Our employees should be incredibly proud of what we have accomplished together and excited for the opportunities ahead of us as we join with Bristol-Myers Squibb, where we can further advance our mission for patients. We look forward to working with the Bristol-Myers Squibb team as we bring our two companies together.”

“Together with Celgene, we are creating an innovative biopharma leader, with leading franchises and a deep and broad pipeline that will drive sustainable growth and deliver new options for patients across a range of serious diseases,” added Dr. Giovanni Caforio, Bristol-Myers Squibb's chairman and CEO. “As a combined entity, we will enhance our leadership positions across our portfolio, including in cancer and immunology and inflammation. We will also benefit from an expanded early- and late-stage pipeline that includes six expected near-term product launches. Together, our pipeline holds significant promise for patients, allowing us to accelerate new options through a broader range of cutting-edge technologies and discovery platforms.”

According to Bristol-Myers Squibb, the combination “create a leading focused specialty biopharma company well positioned to address the needs of patients with cancer, inflammatory and immunologic disease and cardiovascular disease through high-value innovative medicines and leading scientific capabilities.” The new company will have an expansive product portfolio, with Bristol-Myers Squibb noting that the early-stage pipeline will consist of “50 high-potential assets,” with compounds geared toward cancer, immunology/inflammation, cardiovascular disease and fibrotic disease.

Commercialized products include a number of market leaders, with nine products that bring in more than $1 billion annually in sales. In addition, it will have a strong position in oncology, thanks to Bristol-Myers Squibb's Obdivo and Yervoy, and Celgene's Revlimid and Pomalyst. The combined entity will also stand at the top in immunology/inflammation, with Orencia and Otezla, and cardiovascular disease, thanks to Eliquis.

The acquisition is expected to provide run-rate cost synergies of roughly $2.5 billion by 2022, with Bristol-Myers Squibb forecasting “strong returns and significant immediate EPS accretion” in the near-term—in fact, the company is estimating that the deal will be “more than 40 percent accretive to Bristol-Myers Squibb's EPS on a standalone basis in the first full year” following its close.

SOURCE: Bristol-Myers Squibb press release