Bristol-Myers Squibb and Celgene have a big problem in their hands.
After the market closes on Wednesday, Bristol-Myers' biggest investor, Wellington Management, has voiced its opposition to the company's $ 74 billion mega-merger with Celgene. And analysts immediately saw the move as a real threat to the deal, increasing the risk that such a major move could trigger a widespread rebellion among shareholders.
"As BMY's largest shareholder with approximately 8%, this is a real shareholder that poses a very real risk to the transaction," said Brian Skorney of Baird. And he counted down the three reasons invoked by Wellington to oppose the agreement:
1) The transaction requires BMY shareholders to accept too many risks and the terms offer CELG shareholders BMY shares at a price well below the implied value of the asset.
2) The success of the run could be more difficult to achieve than described by the management of the company.
3) Alternative ways to create value for BMY shareholders could be more attractive.
"Although we felt the deal seemed beneficial to Bristol and would materialize, it's not just a position of a million shares expressing dissatisfaction, and we expect CELG to negotiate much less tomorrow "
In fact, he did not have to wait. Celgene shares $ CELG fell more than 10% after the new Wednesday night. Bristol-Myers shares rose by 2.6%.
The only other threat to the deal comes from Starboard Value's activist leader, who has proposed a list of five candidates for the Bristol-Myers board of directors. opinions on redemption among investors. They grabbed a small $ 1 million stake in the head of this movement.
Dodge & Cox, Bristol-Myers' fifth largest investor, would also be disappointed with the takeover. In the event of a public reversal, a landslide could easily occur, which would have the effect of removing the pact between Giovanni Caforio and Mark Alles in Celgene.
Bristol-Myers was quick to counter the move on Wednesday, blocking the dyke by claiming that she had obtained a real benefit by buying the company at the right price and with the intention of following through. Their statement:
Since the announcement of the Celgene transaction on January 3rd, our board of directors and our management team have had many conversations and meetings with our shareholders, including Wellington. We expect to acquire Celgene at an attractive price and that this transaction represents a unique and important opportunity to create sustainable value. We look forward to holding our special meeting of shareholders on April 12, 2019 and to providing the added value that this combination creates.