Summary
- Celgene continues to trade at a significant discount to Bristol-Myers Squibb’s offer price.
- The probability of completion of acquisition of Celgene by Bristol-Myers Squibb is high.
- Bristol-Myers Squibb definitely requires to bolster its commercialized portfolio as well as research pipeline.
- Even in case of deal failure, Celgene remains a good fundamental pick for the long-term investor.
The proposed cash and stock acquisition of Celgene (CELG) by Bristol-Myers Squibb (BMY) saw the former's share price jump up from $66.64 on January 2 to $80.43 on January 3. Bristol-Myers Squibb has offered a total consideration of around $74 billion for Celgene.
Based on the closing price of Bristol-Myers Squibb stock of $52.43 on January 2, 2019, the cash and stock consideration to be received by Celgene shareholders at closing are valued at $102.43 per Celgene share and one CVR worth one-time payment of $9.00 in cash. The latter, however, is subject to FDA approval of Celgene's three investigational assets, ozanimod, liso-cel, and bb2121.
Despite opposition from activist investors, I believe that the probability of deal completion is pretty high. In this article, I will explain my hypothesis for recommending Celgene to retail investors, especially those with above-average risk tolerance, in March 2019.
