Home Investing Bristol-Myers to buy Celgene for $74 billion, creating pharmaceutical powerhouse

Bristol-Myers to buy Celgene for $74 billion, creating pharmaceutical powerhouse

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Tablets of Bristol-Myers Squibb blood thinner Plavix. The drug giant said Thursday it is buying Celgene Corp for about US$74 billion in a cash-and-stock deal.JB Reed/Bloomberg News

Bristol-Myers Squibb Co said on Thursday it would buy Celgene Corp for about US$74 billion, creating a pharma company with several blockbuster cancer drugs and making it one of the biggest mergers on record in the sector.

Bristol-Myers pioneered cancer immunotherapy with its Yervoy and later Opdivo, but has come under pressure as Merck & Co’s rival treatment Keytruda moved ahead in market share in lung cancer treatment, the most lucrative oncology market.

The deal will create a company with nine treatments bringing in more than US$1 billion in annual sales and a significant potential for growth in oncology, immunology and inflammation and cardiovascular disease.

Celgene shareholders will receive one Bristol-Myers Squibb share and US$50 in cash for each share held, or US$102.43 per share, a premium of 53.7 per cent to Celgene’s Wednesday close.

Bristol-Myers shares fell 13 per cent at US$45.20, while Celgene shares rose 30.5 per cent at US$87 in premarket trading.

Celgene shareholders will also receive one tradeable contingent value right for each share held, which will entitle them to receive a one-time potential payment of US$9 in cash upon regulatory approval of ozanimod and liso-cel by Dec. 31, 2020 and bb2121 by March 31, 2021.

Talks opened in September, with Bristol-Myers approaching Celgene, according to a source familiar with the matter.
Last year, Celgene bought experimental cancer drug developer Juno Therapeutics for US$9 billion, betting on its chimeric antigen receptor T-cell therapy, known as CAR-T.

Bristol-Myers said it expects to speed up a share repurchase program of up to about US$5 billion, subject to the closing of the transaction, market conditions and board approval.

The companies expect to close the deal in the third quarter of 2019. The cash portion will be funded through a combination of cash on hand and debt financing.

Bristol-Myers Squibb has obtained fully committed debt financing from Morgan Stanley Senior Funding Inc and MUFG Bank Ltd.
Morgan Stanley & Co. LLC is the lead financial adviser to Bristol-Myers, and Evercore and Dyal Co. LLC are its financial advisers. Kirkland & Ellis LLP is its legal counsel.

J.P. Morgan Securities LLC is serving as lead financial adviser and Citi is the financial adviser to Celgene. Wachtell, Lipton, Rosen & Katz is its legal counsel.

© Thomson Reuters 2019

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