Bristol-Myers Squibb Co’s top shareholder, Wellington Management, on Wednesday said that it does not support the US drugmaker’s US$74 billion purchase of biotech Celgene Corp, imperiling what would be the largest pharmaceutical company takeover of all time.
Wellington Management, which owns about 8 percent of Bristol-Myers shares, said that it believes the deal is too risky and too expensive, and that alternatives to create value for shareholders “could be more attractive.”
Celgene shares fell 8.5 percent after the Wellington statement was released, while Bristol-Myers shares rose 3 percent.
Photo: Reuters
Bristol-Myers in January said that it would buy New Jersey-based Celgene, combining two of the world’s largest cancer therapy businesses, with Bristol acquiring Celgene’s Revlimid, one of the world’s top-selling blood cancer drugs.
Bristol-Myers said in a statement that its board and management have had “numerous conversations and meetings” with investors, including Wellington, since announcing the Celgene deal.
“We believe that we are acquiring Celgene at an attractive price, and that this transaction presents an important and unique opportunity to create sustainable value,” Bristol-Myers said.
Celgene declined to comment.
Boston-based Wellington Management rarely makes its views public, which has suggested to analysts that Wednesday’s statement against the proposed deal is both highly unusual and noteworthy.
In addition to its concerns about the price, the Wellington statement said successful execution of the deal could be more difficult to achieve than depicted by company management.
Following Wellington’s announcement, the spread between Celgene’s share price and the value of Bristol’s bid for Celgene nearly doubled in after-the-bell trading to about 20 percent, indicating increased skepticism that the deal will get done.
The Wellington statement came a week after Bristol-Myers said that activist hedge fund Starboard Value LP intends to nominate five directors to the Bristol-Myers board.
Reports last month said that Starboard was working with a proxy solicitor to gauge the level of support among Bristol-Myers shareholders for the Celgene deal.
If it finds enough discontent, Starboard could agitate against it.
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