Finance - Big Pharmaceutical Merger Riles Shareholders
Bristol-Myers Squibb shareholders are not happy with the company's plan to purchase a smaller rival, sending the larger company's shares down twelve percent at the end of the day on Wall Street.
Conversely, shares of New Jersey-based cancer drug maker Celgene surged 25 percent after the deal was announced. New York-based Bristol wants to purchase Celgene in a cash and stock deal valued at US$74 Billion. Celgene shareholders will receive one Bristol-Myers Squibb share and $50 in cash for each Celgene share held. But once the debt is factored in, the value of the deal balloons to about $95 Billion, which would make it the largest health-care deal on record.
That price tag - 50 percent above Celgene's market worth before the announcement - may be too high for Bristol's large institutional shareholders, some of which already seemed poised to throw a spanner in the works by voting against the deal. The deal would also be subject to various regulatory approvals.
Absorbing Celgene would give Bristol a boost to its immuno-oncology portfolio as it struggles to keep up with rival Merck Pharmaceuticals. The combined firm would havenine medicines that each generate more than US$1 Billion in annual sales, plus a broad field of drugs in development that could result in $15 Billion in revenue.
"This deal is really all about the launches," said Bristol chief executive Giovanni Caforio. "Given the number of short-term launches and growth opportunities, we believe this is the right time."