BMS-Celgene’s US$ 74 billion mega merger may get derailed due to investor opposition

By PharmaCompass

2019-03-07

Impressions: 122 Article

The New Year opened to the news of a definitive merger agreement between Bristol-Myers Squibb (BMS) and Celgene Corporation, with the former acquiring the latter for US$ 74 billion. Two months on, there is news that BMS could have its plans derailed by some influential financial advisers.

In February, activist investor Starboard Value bought stake in BMS and speculation arose about the Starboard’s rising opposition to the deal. Later, BMS’ biggest institutional investor —Wellington Management — came out publicly against the merger, and Starboard followed with its own arguments against it. Their opposition to the merger has left investors baffled, as they are wondering whether the takeover is in trouble or not.

Analysts too are divided on its outcome. According to reports, Credit Suisse’s Vamil Divan is of the view that there is plenty of overlap between the shareholder bases of BMS and Celgene. And this should work in the deal’s favor.

UBS’s Navin Jacob, on the other hand, worries what the new ‘merged entity’ will look like. According to him, it may face a “double digit earnings compound annual growth rate decline between 2025 and 2030.”

Meanwhile, Celgene announced that the FDA has accepted the New Drug Application (NDA) for Fedratinib, a drug for myelofibrosis and that it expects to submit the Biologics License Application (BLA) for Luspatercept in April. These drugs are part of the six new launches scheduled for 2019, and Celgene and BMS expect to earn more than US$ 15 billion in peak annual sales from these new drugs.

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