Summary
- Large BMY shareholders are starting to oppose its acquisition of CELG.
- The uncertainty of whether the deal will go through or not is driving the fall in CELG share price and increasing its spread.
- We believe that the deal will go through as these shareholders are still short of the majority.
- CELG shares to rebound to $90+; hold onto CELG.
In January 2019, Bristol-Myers Squibb (BMY) announced its intention to acquire and merge with Celgene (CELG) for $50 cash plus one share of BMY plus a CVR valued at $9/share which drove CELG's shares up to the $90+ mark.
However, since that announcement, several major shareholders of BMY expressed their opposition to the deal. Starboard Value led the opposition to this deal from its outset. However, given its relatively small position and voting power in BMY (1M shares which are equivalent to 0.06%), it needed the backing of other big shareholders to have any meaningful chance of halting the deal. This backing came from Wellington, the top holder of BMY with 8% share and Dodge & Cox, which holds a 2.61% share position in BMY and is its 5th largest shareholder, as they both voiced their opposition to the deal.
In spite of the latest dissent regarding the deal, we still expect the deal to go through when the shareholders cast their votes on April 12th as those who oppose the deal are still way short of reaching the 49% share mark that is required to halt the deal. This will pave the way for the deal to conclude by 3Q19. Having said that, and with BMY valuing CELG at $100+ per share, there is good upside for CELG's stock.
