According to reports, Bristol-Myers Squibb has held meetings with its shareholders in New York and Boston over the period of two weeks in an attempt to salvage the purchase of Celgene worth $74 billion. Celgene is cancer drug producer and its purchase has made headlines as the biggest acquisition that has been announced thus far in the ongoing year.
The deal was announced back in January. However, from the very beginning, the deal had not gone down well with Bristol shareholders. This acquisition has added approximately $32 billion as fresh debt in the balance sheet of Bristol. Further, as was said by the companies at the time, it has also assumed a mammoth space in Celgene’s debt with figures of $20 billion. According to Refinitiv’s data compilation, following a factor-in of the debt, the acquisition has been termed as the biggest on-record health-care deal.
Additionally, hedge funds like Starboard Value and Wellington Management have declared that they’re not on board with the deal. Executives have been sent to New York by Bristol in order to meet institutional investors a number of times in the last couple of weeks. According to an individual having briefed on such meetings, dialogue has been established with Boston investors on Wednesday as well as Thursday. No comment was received about the same on the part of Bristol-Myers.
According to the biggest institutional holder of Bristol, Wellington, the deal of Celgene is asking Bristol shareholders to shoulder an unacceptable amount of risk. Wellington owns nearly 8% or 135.3 million shares of the firm’s common stock. Similar concerns have been raised by Starboard, in open letters addressed to its shareholders. Starboard, on its part, owns approximately 1 million shares and has termed the deal as ill-advised and poorly conceived. Bristol shares saw a rise of about 1.4% on Thursday, while shares of Celgene dropped by about 8.7%.