Summary
- BMY is acquiring CELG in a stock and cash deal currently valued at $98.93 for each share of CELG plus an earn-out worth $9 per share.
- The deal is subject to shareholder approval from both companies as well as regulatory approval. The deal is expected to close by the end of 2019.
- The deal spread is over 11%, making this an attractive absolute return opportunity for those who wish to go long CELG or put on a market-neutral risk arb spread.
Deal Overview
On January 3, 2019, Bristol-Meyers Squibb (BMY) announced it would acquire Celgene (CELG) in a stock and cash transaction. BMY is offering $50 cash, 1 share of BMY valued at $52.43 the day before announcement, and a contingent value right (“CVR”) worth $9 cash if certain milestones are met. This implied a total buyout offer of $102.43 and 1 CVR for each share of CELG, a 54% premium to the price CELG’s stock traded prior to announcement.
This massive $74 billion merger is set to create the #1 oncology player, a top-5 immunology company, and the #1 cardiovascular franchise in biotech. The combined company will have a robust pipeline with 6 near term product launches over the next 12-24 months, representing more than $15 billion in potential revenue (according to the company). Finally, BMY believes it can achieve $2.5 billion in run-rate synergies from SG&A, R&D, and manufacturing.
