CELG Celgene Corporation

By Patrick Thomas 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (February 28, 2019).

One of Bristol-Myers Squibb Co.'s largest shareholders is opposing the company's $74 billion deal to buy rival Celgene Corp., becoming the latest investor to express its unhappiness with the transaction.

Wellington Management Co., an investment firm that has a stake of about 8% in Bristol-Myers, said Wednesday the deal asks shareholders to take on too much risk and offers Bristol shares too cheaply to Celgene shareholders. The firm also said executing a successful transaction could be more difficult than management has anticipated. Boston-based Wellington Management is a private investment firm that manages about $1 trillion in assets globally.

While the size of Wellington's stake makes it Bristol's largest shareholder, according to Refinitiv, the firm disclosed in a filing Wednesday that it only holds voting power for about 28 million of its 126 million shares, meaning its opposition could be less of a factor than it appears. Still, it could prompt other shareholders to more seriously consider opposing the deal.

"While Wellington agrees that Bristol-Myers should be active in business development that secures differentiated science and broadens the future revenue base, Wellington does not believe that the Celgene transaction is an attractive path towards accomplishing this goal," the firm said in a statement.

Bristol-Myers and Celgene announced their proposed combination on Jan. 3, touting the benefits of combining two major sellers of cancer drugs.

In a statement Wednesday, Bristol-Myers said it has had many conversations with shareholders, including Wellington, since it announced the Celgene deal.

"We believe that we are acquiring Celgene at an attractive price, and that this transaction presents an important and unique opportunity to create sustainable value," the company said.

Bristol-Myers shareholders are set to vote on the takeover on April 12, and approval requires a majority of votes cast. Owners of Bristol-Myers stock as of March 1 will be permitted to vote, meaning there is still a window for investors opposed to the deal to buy shares to vote against it.

The companies have said they expect the deal to close in the third quarter this year.

In addition to Wellington, activist investor Starboard Value LP and Dodge & Cox, are unhappy with the deal, The Wall Street Journal has reported. But that doesn't necessarily mean they will vote against it.

Starboard earlier this month also nominated five potential directors to Bristol-Myers's board. It isn't clear why Starboard nominated the slate. Starboard has acquired about one million shares in the company, Bristol-Myers previously said, a sliver of its roughly 1.6 billion shares outstanding. Dodge & Cox has a 2.6% stake in Bristol-Myers and is the company's fifth-largest shareholder, according to FactSet.

Write to Patrick Thomas at Patrick.Thomas@wsj.com

(END) Dow Jones Newswires

February 28, 2019 02:47 ET (07:47 GMT)

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