Bristol-Myers Squibb Secures Over 75% Shareholder Approval for $74 Billion Acquisition of Celgene

In January 2019, Bristol Myers Squibb’s (BMS) announcement of its $74 billion acquisition of Celgene sent shockwaves through the industry. However, the deal faced strong opposition from three of BMS’s major shareholders, prompting the company to promptly announce a special shareholder meeting in April to vote on the transaction.

On April 12, the special shareholders’ meeting of Celgene Corporation regarding its acquisition by Bristol Myers Squibb (BMS) was held as scheduled. The pending transaction finally concluded three months after its announcement. BMS announced the final results on the evening of April 12.More than 75% of shareholders approved the transaction.In accordance with customary practice and regulatory procedures, BMS will complete the transaction in the third quarter of 2019.

“We are very pleased with today’s results and thank all shareholders for their support,” said Dr. Giovanni Caforio, Chairman and Chief Executive Officer of BMS. “Together with Celgene, we will build a premier innovative biopharmaceutical company that brings benefits to patients by developing high-value medicines. At the same time, we also expect to deliver substantial value to our shareholders in the future.”

BMS disclosed that more than 75% of shareholders voted in favor of the transaction, and the company will disclose the detailed results of the shareholder vote in its 2019 semi-annual report. Earlier, those who publicly opposed the transactionStarboard Value also stated in late March that it would no longer oppose.

As of press time, BMS’s stock price stood at $45.70, down 0.87%.

On January 3, 2019, Bristol Myers Squibb (BMS) announced its plan to acquire Celgene for $74 billion. BMS aimed to integrate Celgene’s existing pipeline to establish itself as a leading player in solid tumors and hematologic malignancies; however, this strategy did not appear to gain full approval from shareholders.

On February 22, BMS filed an acquisition application with the U.S. Securities and Exchange Commission (SEC), prompting two major shareholders, Wellington Management and Starboard Value, to publicly oppose the transaction. Moreover, as early as January 14, U.S. Representatives Peter Welch and Francis Rooney raised concerns about the BMS acquisition plan under review by the Federal Trade Commission (FTC) and the Department of Justice (DOJ). They argued that the acquisition could stifle healthy competition in the field, particularly in oncology.

Wellington Management, which holds approximately 8% of BMS’s equity, and Starboard Value, another shareholder of BMS, both announced on February 27 their opposition to the $74 billion acquisition. Wellington cited three primary reasons, stating that the transaction imposes excessive risk on BMS shareholders. Starboard, which holds a 1% stake, described the deal as “poorly conceived and ill-advised” and stated it would seek support from other BMS stakeholders to block the transaction. Dodge & Cox, another shareholder with a 2% stake, also expressed its opposition to the deal.

BMS management believes that, through the acquisition of Celgene, BMS is poised to become the most powerful company in the field of oncology therapeutics. However, BMS shareholders argue that this transaction exposes them to excessive risk. Ultimately, BMS announced that a special shareholders’ meeting would be held on April 12 to vote on the acquisition.

With the approval of the vote, a supergiant will emerge in the field of oncology treatment. The merged company will have 10 drugs in Phase III clinical trials, six of which are expected to hit the market soon. In its early- and mid-stage pipeline, there are 21 immuno-oncology and solid tumor products, 10 hematologic oncology products, 10 immunology and inflammation products, and nine cardiovascular and fibrosis disease products. Coupled with the strategic partnership between Celgene and BeiGene, BMS will hold two PD-1 inhibitors and one CAR-T therapy, truly becoming a behemoth in the treatment of both solid tumors and hematologic malignancies.

At the same time, BMS will consequently accumulate substantial debt. Currently, BMS’s long-term debt stands at only $7.3 billion; upon completion of the transaction, an additional $32 billion will be added to the company’s balance sheet. Meanwhile, it will also assume Celgene’s $20 billion in debt. As a result, BMS’s debt insurance costs have risen to their highest level since May 2010, and the company’s credit default swap spread has increased by 66%.