On January 3 this year, it became clear that Bristol-Myers would acquire Celgene Corporation (NASDAQ:CELG). Luckily for CELG investors, the deal couldn’t come at a better time. The firm’s investors were under pressure to ditch the stock as it had taken a considerable beating from the market. However, Bristol-Myers decided to be the white knight to deliver the investors from loss.
Celgene investors to earn a substantial premium
According to the details of the deal, Bristol-Myers (BMY) will cough up $74 billion before the deal closes. Further, the firm will give Celgene investors $50 in cash for every one share that they hold. In addition to this, each stockholder will receive one share of BMY’s common stock for every one share they hold in Celgene. This is a fascinating deal for Celgene investors since it represents a 54% on the stock.
“Celgene shareholders will also receive one tradeable Contingent Value Right (CVR) for each share of Celgene, which will entitle the holder to receive a payment for the achievement of future regulatory milestones,” the words of the deal state in part.
Interestingly, commentators are even more watchful of what this deal might do regarding mergers in the pharmaceutical industry. Notably, the last few months have been unfair to biopharma stocks which resulted in significant underperforming for the companies.
As such, it is not unsurprising that some other firms may want to protect their market share. Interestingly, the only way to achieve that right now is via a merger or an acquisition.
It is safe to say that the latest developments are working in favor of Celgene. Notably, the firm recently offered guidance for 2019, and it is clear the firm expects the acquisition to improve revenues. Interestingly, Celgene expects the gross revenue at the end of 2019 to clock somewhere between 17.0 billion and $17.2 billion. This is quite a high expectation compared to the $15.2 billion guidance for 2018.
Interestingly, the firm attained the 2018 guidance, something it hopes to replicate in this year. In particular, commentators see the latest transaction as strategic towards Celgene achieving its vision 2020. Notably, the company expects to generate between $19.0 billion and $20.0 billion in revenue by 2020.