Starboard Gives Way On Bristol Purchase -- WSJ
March 30 2019 - 2:02AM
Dow Jones News
By Cara Lombardo
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 (March 30, 2019).
Hedge fund Starboard Value LP dropped its fight to break up the
year's biggest deal so far -- Bristol-Myers Squibb Co.'s $74
billion acquisition of rival drugmaker Celgene Corp. -- after two
influential proxy-advisory firms recommended shareholders approve
it.
The activist investor, who had argued the deal was too risky and
done as a defensive move, said Friday it wouldn't actively solicit
votes against the transaction ahead of a shareholder vote next
month. Starboard noted that despite "the substantial swell" of
opposition to the deal, it is unlikely to get voted down given the
support from proxy advisers Institutional Shareholders Services
Inc. and Glass Lewis & Co.
Bristol-Myers said in a statement Friday that it is pleased with
the proxy advisers' decisions. It didn't address Starboard's ending
its campaign.
Bristol-Myers and Celgene announced their proposed
cash-and-stock combination Jan. 3, touting the benefits of
combining two major sellers of cancer drugs. They said a merged
company would have nine products with more than $1 billion each in
annual sales and a pipeline that includes several near-term product
launches.
ISS and Glass Lewis said in reports issued Friday that the deal
appears to be in the interest of Bristol-Myers shareholders because
it replenishes the pharmaceutical company's late-stage drug
pipeline and diversifies its offerings.
In a surprise move late last month, the normally reserved
Boston-based investment firm Wellington Management Co. publicly
opposed the deal, arguing it could be difficult to execute and
offers Bristol shares too cheaply to Celgene. Wellington has a
stake of 7.2% in Bristol-Myers, according to FactSet, but doesn't
control the votes on most of those shares.
Other large institutional shareholders -- such as BlackRock
Inc., which holds a 4.7% stake, according to FactSet -- were seen
as less likely to vote against the deal because they hold
significant positions in both Bristol-Myers and Celgene.
Bristol-Myers shareholders are set to vote on the takeover April
12, with approval requiring a majority of votes cast. Starboard,
which holds a stake of less than 1%, according to FactSet, said it
still plans to vote against the transaction and urged others to do
the same.
In a sign that investors expect the deal to close, Bristol-Myers
shares were down 1.3% in afternoon trading, while Celgene shares
gained roughly 7.5%.
Starboard had earlier this year nominated five potential
directors, including its chief executive, Jeffrey Smith, to join
the Bristol-Myers board. It wasn't immediately clear whether
Starboard also pulled those nominations, which wouldn't be voted on
until Bristol-Myers's annual meeting later this year.
Starboard has been one of the busiest activists so far this
year, but it doesn't normally target companies as big as
Bristol-Myers. Last month, Mr. Smith took over as Papa John's
International Inc.'s chairman, and earlier Friday Magellan Health
Inc. announced a settlement agreement with Starboard giving the
hedge fund board seats.
--Maria Armental contributed to this article.
Write to Cara Lombardo at cara.lombardo@wsj.com
(END) Dow Jones Newswires
March 30, 2019 02:47 ET (06:47 GMT)
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