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Bristol-Myers to buy Celgene for $74 billion in the largest biopharma deal

Bristol-Myers buy Celgene

The deal intends the formation of a Premier Innovative Biopharma Company.

Bristol-Myers Squibb Co lately announced a definitive merger agreement under which it will acquire Celgene in a cash and stock transaction with an equity value of approximately $74 billion. Combining two of the world’s largest cancer drug businesses, this is the biggest pharmaceutical deal ever.

Reportedly, the deal resolves separately faced challenges by both Bristol-Myers and Celgene moreover, the companies said, combined they would create $2.5 billion in cost savings and significantly raise earnings.

Bristol-Myers’ near future look-outs

With this deal, Bristol-Myers expects to achieve the $2.5 billion in cost savings by 2022, with 55 percent coming from cuts in sales, general and administrative expenses, 35 percent through a reduction in research & development spending and 10 percent from manufacturing. It said the deal will add more than 40 percent to its earnings in the first year after the deal closes, expected in the third quarter of 2019.

The move aims to deliver sustainable solutions

Giovanni Caforio, M.D., Chairman and Chief Executive Officer, Bristol-Myers Squibb, stated, “Together with Celgene, we are creating an innovative biopharma leader, with leading franchises and a deep and broad pipeline that will drive sustainable growth and deliver new options for patients across a range of serious diseases.”

Giovanni continued, “As a combined entity, we will enhance our leadership positions across our portfolio, including in cancer and immunology and inflammation. We will also benefit from an expanded early- and late-stage pipeline that includes six expected near-term product launches. Together, our pipeline holds significant promise for patients, allowing us to accelerate new options through a broader range of cutting-edge technologies and discovery platforms.”

The insights into the deal

Under terms of the deal, Celgene shareholders will receive one Bristol-Myers Squibb share and $50 in cash for each share held, or $102.43 per share, a premium of 53.7 percent to Celgene’s last day close. Moreover, Celgene shareholders will also receive a CVR payment, or contingent value right, of $9 if three treatments in development achieve timely approvals. Those are the high-profile multiple sclerosis drug ozanimod, lymphoma treatment liso-cel by Dec. 31, 2020, and a CAR-T therapy for multiple myeloma known as bb2121 from a partnership with bluebird bio by March 31, 2021.