New York's Bristol-Myers Squibb Co., the maker of blockbuster cancer drug Opdivo, is acquiring Celgene Corp. in a cash and stock deal with an equity value of about $74 billion.
Celgene shareholders will receive 1 Bristol-Myers share and $50 in cash for each share they own in the company. Shareholders of Summit, N.J.-based Celgene will also receive one tradable contingent value right for each share held, which will entitle the holder to receive $9 in cash upon approval of three product candidates by the U.S. Food and Drug Administration.
Bristol-Myers shareholders are expected to own about 69% of the combined company, while Celgene shareholders are expected to own roughly 31%.
Bristol-Myers' Chairman and CEO Giovanni Caforio said, "as a combined entity, we will enhance our leadership positions across our portfolio, including in cancer and immunology and inflammation." He added that the company will also benefit from an expanded early- and late-stage pipeline, which includes six expected product launches.
Caforio will continue to serve as chairman and CEO of the combined company while two Celgene board members will be added to Bristol-Myers' board.
Bristol-Myers Squibb also announced its earnings guidance for 2019, which excludes the impact of the Celgene acquisition. The company expects GAAP EPS to between $3.75 and $3.85 while non-GAAP EPS is expected to be in the range of $4.10 to $4.20. The company said the transaction is expected to be more than 40% accretive to its EPS on a standalone basis in the first full year following the deal's close.
New York-based Bristol-Myers also expects to realize about $2.5 billion in cost savings by 2022.
Bristol-Myers will fund the transaction through cash on hand and debt financing from Morgan Stanley Senior Funding Inc. and MUFG Bank Ltd. Bristol-Myers will also undertake a $5 billion share buyback program, subject to the merger's closing.
The transaction, which is expected to be completed in the third quarter of 2019, is subject to shareholder approval of both companies, regulatory approvals and other customary closing conditions.
Bristol-Myers shares were down by about 15.51% in pre-market trading on NYSE to $44.30 each. Celgene shares were up a little over 33% to $88.65 each in pre-market trading on Nasdaq.
Morgan Stanley & Co. LLC is serving as lead financial adviser and Evercore and Dyal Co. LLC are acting as financial advisers to Bristol-Myers. Kirkland & Ellis LLP is serving as Bristol-Myers Squibb’s legal counsel.
J.P. Morgan Securities LLC is serving as lead financial adviser, while Citi is acting as financial adviser to Celgene. Wachtell Lipton Rosen & Katz is serving as legal counsel to Celgene.