Bristol-Myers Squibb Will Make a Billion-Dollar Deal to Acquire Celgene

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Drug maker Bristol-Myers Squibb is purchasing a cancer drug maker company Celgene in a cash and stock. The company announced the $74 billion deal on Thursday. It is one of the biggest alliance in the history of the pharmaceutical industry. Still, the agreement requires the permission of shareholders and regulators. Bristol-Myers itself is a merger of two companies that came together in the 19th century. The company is the eighth largest drug maker in the U.S. Annual turnover of the company for the year 2017 is $20.8 billion. Whereas, Celgene is the ninth largest company having a revenue of $13 billion.  In September 2018, Bristol offered the partnership deal to Celgene. Since then the two companies were talking about the contract. However, the board directors of both of the companies sanctioned the deal, which would terminate in the third quarter.

Under the contract, shareholders of Celgene will get one share of Bristol-Myers share. An amount of $50 will be offered for each share held. Otherwise, $102.43 per share, a premium of 53.7 percent to Celgene’s Wednesday close will be given. Bristol-Myers Squibb Chairman and CEO Giovanni Caforio said, together with Celgene, they are developing a modern biopharma leader. According to the analysts of Wall Street, the deal is a big jackpot for Celgene. The license for Revlimid is going to expire in 2022, which is a top-selling blood-cancer drug. The drug brought in about $10 billion in the previous year. In the previous year, Celgene concurred to buy the Juno Therapeutics. But it didn’t have the amount of $9 billion to acquire access to company’s pipeline of cancer drugs.

The companies aim to launch six other drugs in the upcoming 12 to 24 months. Introducing those new medicines in the market could lead to annual revenue of $15 billion. Celgene shareholders will gain an additional $9 per share of the company if FDA sanctions three of the drugs. Currently, Bristol is paying an installment of $25 billion. So the company has had its own problem as well. The concerns also include a pushback from FDA on its application for approval of two drugs. On Thursday, Alex Arfaei, BMO Capital Markets analyst said the proposed investment seems expensive to him. The deal probably covers a major strategic priority for the U.S. based Bristol. The company had various R&D issues in the past few years.

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