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Disapproval from top shareholder throws $74bn BMS/Celgene merger into doubt

Published on 28/02/19 at 12:07pm

The news kicked off 2009 with a bang when Bristol-Myers Squibb announced it intended to acquire Celgene for $74 billion, but what could potentially be the biggest pharmaceutical industry merger of all time has been thrown into doubt thanks to a key BMS shareholder.

Top shareholder Wellington Management, which owns around 8% of BMS shares, has announced, in a rare move, that it does not support the prospective deal on the basis that it is a risky and expensive move. Celgene’s shares dropped by 8.5% following the news, but BMS shares rose 3% - the difference in share price between the two companies widened to almost 20%.

Activist hedge fund Starboard Value has been vocal in its opposition to the potential deal, canvassing its shareholders and filing a slate of nominees in a bid to put a stop to it. Analysts believe Wellington Management’s announcement could embolden this stance, and lead other shareholders to voice their disapproval for the deal.

However, BMS remained optimistic and determined: “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.”

Matt Fellows

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