BMS-Celgene merger chances improve with backing from proxy advisers

By | March 31, 2019

When it comes to Bristol-Myers Squibb’s Celgene merger, two influential proxy advisory firms have spoken—and they’re in favor of the mammoth tie-up.

Institutional Shareholder Services and Glass Lewis both said Friday that they’re backing the transaction. ISS pointed to deal’s “sound” strategic rationale and cost-cutting potential, while Glass Lewis said the buy “presents the opportunity for potentially significant returns to shareholders of the combined company, including existing Bristol-Myers holders,” as BMS quoted in a press release

RELATED: Activist Starboard steps up revolt on Bristol-Celgene merger—and BMS strikes back

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The two thumbs up come about two weeks before the companies’ April 12 shareholder vote, which activists have been working hard to sway. Proxy brawler Starboard Value has called the merger “poorly conceived and ill-advised,” and Wellington Management, BMS’ largest shareholder, has come out against it, too.

Analysts, though, have maintained that without more shareholder support for the deal-scuttling campaign, the purchase would go through as planned, and ISS and Glass Lewis’ verdicts have only strengthened that conviction.

“The recommendation today significantly increases the chances of a deal close as much of the shareholder votes will be inclined to side with ISS, in our view,” Jefferies analyst Michael Yee wrote to clients Friday.

RELATED: Can BMS rebels scuttle its Celgene buy? Analysts do the math—and so far, the votes don’t add up

Bristol and Celgene are certainly happy to hear it. Both are set to face major competitive pressure to leading products in the coming years, with immuno-oncology rivals threatening BMS’ Opdivo and generics waiting to descend on Celgene’s Revlimid.

And while some industry watchers have suggested Bristol could itself seek a buyout, recent commentary from Big Pharma CEOs indicates that most viable suitors—with the potential exception of Amgen, Yee noted—aren’t interested.

“We are pleased that ISS and Glass Lewis share our belief that a combination with Celgene is in the best interests of the company and our shareholders,” Bristol said in a statement. 

Meanwhile, shareholders of both companies celebrated the news, with Bristol’s shares ticking upward and Celgene’s skyrocketing by 8%.

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