Bristol-Myers Squibb is spending $74 billion on fellow drugmaker Celgene in a deal aimed at stocking the combined company's development pipeline with cancer, immunology and cardiovascular treatments.
Bristol would gain the cancer treatment Revlimid in the cash-and-stock deal announced Thursday, as well as inflammatory disease treatments and several products close to launching.
The combined company will have nine products with more than $1 billion in annual sales. Bristol's product portfolio already includes Orencia, an injected drug for rheumatoid arthritis, and the cancer treatment Opdivo.
Bristol Chairman and CEO Giovanni Caforio said in a prepared statement that the combination will create a deep product portfolio that drives growth.
It was a hard sell, however, on Wall Street. Shares of Bristol ended Thursday down $6.90, or 13.3 percent, at $45.12, on a day when the Standard & Poor's 500 lost 2.5 percent. Celgene shares, however, soared $13.79, or 20.7 percent, to $80.43.
Under terms of the deal, shareholders of Celgene Corp., based in Summit, New Jersey, will receive one share of Bristol-Myers Squibb plus $50 in cash for each share they own. They'll also receive one tradeable contingent value right for each Celgene share, allowing the holder to receive a $9 payment when future regulatory milestones are hit.
The cash-and-stock portion of the deal totals $102.43, based on Wednesday's closing price of $52.43 for Bristol shares. That represents a premium of nearly 54 percent to Celgene's closing price of $66.64.
Shareholders of Bristol-Myers Squibb Co., based in New York, would own about 69 percent of the company, with Celgene shareholders owning about 31 percent.