Drugmaker Bristol-Myers to buy Celgene for $74 billion

Grant Boone
January 6, 2019

Shares in Celgene closed at $66.64 apiece on January 2, down by more than half from the $146.52 the stock traded at in early October 2017.

Analysts await Bristol-Myers Squibb Company (NYSE:BMY) to report earnings on February, 4.

Yet the deal comes as both Bristol-Myers and Celgene face separate challenges, and some Wall Street analysts questioned if the combination - which the companies said would create $2.5 billion in cost savings and raise earnings - would solve them.

Bristol-Myers said it expects to speed up a share repurchase programme of up to about $5bn, subject to the closing of the transaction, market conditions and board approval. Palo Capital Inc. purchased a new position in shares of Bristol-Myers Squibb in the 3rd quarter worth about $257,000.

Last year, Celgene bought experimental cancer drug developer Juno Therapeutics for $9 billion, primarily for its CAR-T therapy. Ancora Advsr Ltd Liability Co holds 0.36% of its portfolio in Bristol-Myers Squibb Company (NYSE:BMY) for 149,991 shares.

Shareholders of Bristol-Myers would own about 69 percent of the company, with Celgene shareholders owning about 31 percent. Credit Suisse Group reissued a "hold" rating and issued a $59.00 target price on shares of Bristol-Myers Squibb in a research report on Thursday, December 13th. They include two auto T-cell therapies that Celgene acquired when it bought biotech company Juno Therapeutics for $9 billion a year ago, a small-molecule drug for the blood cancer myelofibrosis, and a protein therapeutic being investigated in patients with myelodysplastic syndromes-a group of blood cancers-as well as in patients with the inherited blood disorder β-thalassemia.

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Celgene's shares rocketed in premarket trading Thursday morning on the deal news, soaring around 32 percent to $88.80. Bristol-Myers Squibb had a return on equity of 47.89% and a net margin of 6.50%. It has underperformed by 14.97% the S&P500. Two analysts have rated the stock with a sell rating, twelve have issued a hold rating and eight have issued a buy rating to the stock. Finally, ValuEngine cut shares of Bristol-Myers Squibb from a "hold" rating to a "sell" rating in a research report on Friday, October 19th.

Talks between Bristol and Celgene opened in September, with Bristol approaching Celgene, according to two sources familiar with the matter. The firm has "Neutral" rating given on Wednesday, August 8 by Atlantic Securities.

Market capitalization (market cap) is the market value of a publicly traded company's outstanding shares. In Tuesday, November 6 report Morgan Stanley maintained the stock with "Equal-Weight" rating.

Bristol-Myers's top two selling drugs a year ago globally were Opdivo and blood clot drug Eliquis, which together accounted for almost half the company's 2017 revenues of $20.8 billion. The stock rating was maintained by BMO Capital Markets with "Market Perform" on Monday, July 23. On Monday, October 8 the firm has "Overweight" rating given by JP Morgan.

Bristol-Myers pioneered immunotherapy with its Yervoy and later Opdivo, but has come under pressure as Merck & Co's rival treatment Keytruda moved ahead in market share in lung cancer treatment, the most lucrative oncology market.

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