New York-based pharmaceuticals giant Bristol-Myers Squibb announced this week the purchase of Celgene Corporation for US$74bn, Reuters reports. “Including debt, the deal is worth $95 billion, eclipsing Pfizer's $89 billion purchase of Warner-Lambert in 2000.” This makes this week’s deal the largest pharmaceutical merger in history.
According to Reuters’ report, Bristol Myers approached Calgene in September 2018 to initiate talks of a purchase. The companies expect the deal to create $2.5bn in cost savings by 2022, “with 55 percent coming from cuts in sales, general and administrative expenses, 35 percent through reduction in research & development spending and 10 percent from manufacturing”, as well as increase earnings. Both Bristol-Myers and Celgene experienced falls in share prices in 2018, with drops of 15.2% and 40% respectively.
In the wake of the deal’s announcement, Bristol Myers’ stock fell by a further 13.3%, while Celgene share prices rose by 20.7% to $89.43 per share.
Celgene shareholders will receive one Bristol Myers share and a cash premium of $50 for each share held. They will also receive a “so-called CVR payment, or contingent value right, of $9 if three treatments in development achieve timely approvals.”
Going forward, Bristol Myers expects to launch six new pharmaceutical products by 2022, five of which will be provided by Celgene.
"Together with Celgene, we are creating an innovative biopharma leader, with leading franchises and a deep and broad pipeline that will drive sustainable growth and deliver new options for patients across a range of serious diseases," Bristol-Myers Squibb Chairman and CEO Giovanni Caforio announced on Thursday.