Celgene Corp. shares jumped after two prominent shareholder advisory firm dealt a blow to an activist investor’s efforts to break up Bristol-Myers Squibb Co.’s $71 billion takeover of the drugmaker.
Institutional Shareholder Services Inc. and Glass Lewis & Co. urged investors to vote for the deal. ISS said that the proposed transaction has “sound strategic rationale and the valuation appears reasonable,” while Glass Lewis said it was strategically and financially compelling.
“Considering the company’s current situation and the lack of assuredly superior alternatives given the risk inherent to all paths of drug development, support for this transaction is warranted,” ISS said in its report Friday.
Celgene shares rose as much as 7.8 percent to $94.27 in New York, their highest price since August. Bristol-Myers was little changed at $47.80.
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Bristol-Myers on Jan. 3 announced the blockbuster deal to acquire Celgene in a cash-and-stock transaction, saying the maker of the blood-cancer therapy Revlimid would add value to the company and bolster its pipeline of new medications.
Starboard Value, the activist fund run by Jeff Smith, came out against the acquisition last month, arguing it wasn’t in the best interest of investors because Celgene will face a significant decline in Revlimid sales once its patent expires. The New York-based hedge fund plans to vote against the transaction at a shareholder meeting slated for April 12. Starboard has also said it believes that Bristol-Myers would be better off as a standalone entity.
Starboard, which has not disclosed the size of its stake in Bristol-Myers, has nominated four directors to the company’s board, and plans to put forward its slate at the annual meeting this year.
A representative for Starboard wasn’t immediately available to comment.
The deal diversifies Bristol-Myers’s late-stage pipeline and reduces its reliance on it top drug Opdivo, ISS wrote in the report.
“We ultimately believe this transaction is more likely than not to deliver for Bristol-Myers shareholders as a whole, in terms of several strategic and financial benefits,” Glass Lewis said.
Date: April 01, 2019
Source: Wyoming News