Categories Health Care, U.S. Markets News
Celgene stock jumps after advisory firm backs merger with Bristol-Myers Squibb
The planned acquisition of Celgene (CELG) by rival drugmaker Bristol-Myers Squibb (BMY) got a new lease of life this week after proxy advisory firm Institutional Shareholder Services recommended Bristol-Myers shareholders to support it. The $74 billion deal has been in limbo following objection from a section of investors who own stake in Bristol-Myers.
Celgene’s stock gained about 8% in early trading Friday as shareholders welcomed the intervention of ISS in the proposed merger. The stock rally began in the pre-market session and continued after regular trading started.
In a letter sent to the shareholders, ISS termed the valuation ‘reasonable’ and opined that the transaction has a strong strategic rationale. The recommendation is in stark contrast to the negative stance adopted by activist investor Starboard Value and Bristol-Myers stakeholder Wellington Management earlier, saying the deal is ill-advised and poorly conceived.
According to Starboard, Celgene’s drug pipeline is very risky and it faces headwinds to revenue growth from the expiration of key patents in the next few years. Wellington Management believes the acquisition of Celgene will not help Bristol-Myers in achieving its business goals and enhancing the top-line performance in the future.
Also see: Bristol-Myers Squibb Company Q4 2018 Earnings Conference Call Transcript
Bristol-Myers shareholders are scheduled to vote on the closely-watched buyout on Tuesday. Meanwhile, advisory service Glass Lewis has also taken a stance supporting the deal.
As per an agreement reached by the companies when the acquisition was conceived in early January, Celgene shareholders will get one Bristol-Myers share and $50 in cash for each Celgene share. In addition, they will be eligible for a special rights issue, to be paid off once the combined entity meets certain financial milestones.
For the December-quarter, Celgene reported a 16% growth in revenues to about $4 billion, driving adjusted earnings higher by 20%. Benefitting from a decline in research and development costs, the company turned to a net profit during the quarter, on a reported basis.
After slipping to a five-year low in the final weeks of 2018, Celgene shares have gained more than 50%, once again crossing the $90-mark. The stock rose around 40% since the beginning of the year.
Meanwhile, Bristol-Myers traded down 1% in the early trading hours on Friday, continuing the downturn that started mid-March. Currently, the stock is down 25% from the levels seen a year ago.
Get access to timely and accurate verbatim transcripts that are published within hours of the event
Most Popular
Infographic: How Alaska Air Group (ALK) performed in Q1 2024
Alaska Air Group (NYSE: ALK) reported its first quarter 2024 earnings results today. Total operating revenue increased 2% year-over-year to $2.23 billion. Net loss amounted to $132 million, or $1.05 per
KMI Earnings: Kinder Morgan Q1 2024 adjusted profit increases; revenue drops
Kinder Morgan, Inc. (NYSE: KMI) reported higher adjusted earnings for the first quarter of 2024 despite a decrease in revenues. The energy infrastructure company also issued guidance for the full
What to expect when Altria (MO) reports first quarter 2024 earnings results
Shares of Altria Group, Inc. (NYSE: MO) stayed green on Wednesday. The stock has dropped 8% over the past one month. The tobacco giant is scheduled to report its first
Comments