Summary
- It was reported that Starboard has taken a stake in BMY. The market reaction indicates that investors believe Starboard will advocate against the Celgene acquisition.
- The Celgene deal will most likely receive shareholder approval due to several factors that will make an activist campaign extremely difficult.
- With a deal spread in excess of 13%, excluding the $9 per share CVR, this represents an attractive entry point into the risk-arb trade.
Last week I wrote about the Celgene (CELG)/Bristol-Myers Squibb (BMY) deal spread. I noted that the double-digit deal spread is attractive and I have invested as such.
News of Starboard's Stake
Over the weekend, it was reported that Starboard has taken a stake in BMY. At the time of writing, neither Starboard nor BMY has commented on the news. We do not know the size of the investment, but it is likely paltry given Starboard's relative size to BMY.
Markets reacted, sending CELG down more than 2% and BMY up nearly 2% in the trading day immediately following the announcement. Clearly, investors believe that Starboard may advocate for BMY to call off the deal or at least alter the outcome.
