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Proxy advisor ISS backs Bristol-Myers takeover of Celgene

Published 29/03/2019, 14:19
© Reuters. FILE PHOTO: Logo of global biopharmaceutical company Bristol-Myers Squibb is pictured on the blouse of an employee in Le Passage
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By Svea Herbst-Bayliss and Michael Erman

NEW YORK (Reuters) - Proxy advisory firm Institutional Shareholder Services on Friday said shareholders of Bristol-Myers Squibb (NYSE:BMY) Co should vote in favour of the drugmaker's proposed $74 billion takeover of rival Celgene Corp (NASDAQ:CELG)., which has been opposed by one of its largest investors and an activist hedge fund.

Shares of Celgene rose 7.5 percent to $94 in early trading. Bristol-Myers shares were up 0.8 percent at 48.20.

The ISS recommendation is a victory for Bristol-Myers and significantly increases the chances that many big mutual funds will back the deal. ISS' opinions are sent to roughly 1,400 investors and are thought to influence many of their decisions.

Bristol-Myers announced in early January that it planned to buy Celgene in a cash and stock transaction valued at roughly $74 billion that would bring together companies that specialise in oncology and cardiovascular drugs in what would be the largest pharmaceutical industry merger ever.

Bristol-Myers' shareholders are set to vote on the deal on April 12.

The company's second largest shareholder, Wellington Management, and activist investor Starboard Value LP have opposed the deal. Starboard has called it "poorly conceived and ill-advised."

The spread between Celgene’s share price and the value of the Bristol-Myers bid - a measure of investor confidence in the deal - tightened significantly on Friday to about 4 percent, suggesting optimism that the transaction will close. It had been as wide as about 20 percent after the investors announced their initial opposition to the deal.

© Reuters. FILE PHOTO: Logo of global biopharmaceutical company Bristol-Myers Squibb is pictured on the blouse of an employee in Le Passage

If the deal is approved, Bristol-Myers shareholders will own 69 percent of the company and Celgene shareholders would have the remainder.

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