Bristol-Myers Squibb and Celgene have entered into a definitive merger agreement under which Bristol-Myers Squibb will acquire Celgene in a cash and stock transaction with an equity value of approximately $74 billion.

“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,” said Giovanni Caforio, MD, Chairman and Chief Executive Officer of Bristol-Myers Squibb, in a January 3, 2019 company statement. “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 combined company will have nine products with more than $1 billion in annual sales in core disease areas of oncology, immunology and inflammation, and cardiovascular disease with key drugs being Bristol-Myers Squibb’s immuno-oncology drug, Opdivo (nivolumab), and anticoagulant, Eliquis (apixaban), each with 2017 sales of $4.9 billion and Celgene’s multiple myeloma drug, Revlimid (lenalidomide), with 2017 sales of $8.2 billion. Overall, in 2017, Bristol-Myers Squibb, posted 2017 revenues of $20.8 billion and Celgene 2017 revenues of $13.0 billion.

The combined company would also have near-term launch opportunities representing more than $15 billion in revenue potential according to the companies. The combined company will have six expected near-term product launches: two in immunology and inflammation, TYK2 and ozanimod, and four in hematology, luspatercept, liso-cel (JCAR017), bb2121, and fedratinib. The combined company’s early-stage pipeline includes 50 high-potential assets, according to the companies. It also would have combined discovery capabilities in a broad range of modalities in small-molecule design, biologics/synthetic biologics, protein homeostasis, antibody engineering, and cell therapy.

Under the terms of the agreement, Celgene shareholders will receive 1.0 Bristol-Myers Squibb share and $50.00 in cash for each share of Celgene. 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 upon US Food and Drug Administration (FDA) approval of three late-stage assets. Each share also will receive one tradeable CVR, which will entitle its holder to receive a one-time potential payment of $9.00 in cash upon FDA approval of all three of the following drug candidates: ozanimod (by December 31, 2020), liso-cel (JCAR017) (by December 31, 2020), and bb2121 (by March 31, 2021), in each case for a specified indication.

Based on the closing price of Bristol-Myers Squibb stock of $52.43 on January 2, 2019, the cash and stock consideration to be received by Celgene shareholders at closing is valued at $102.43 per Celgene share and one CVR. When completed, Bristol-Myers Squibb shareholders are expected to own approximately 69% of the company, and Celgene shareholders are expected to own approximately 31%. The Boards of Directors of both companies have approved the combination. The transaction is subject to approval by Bristol-Myers Squibb and Celgene shareholders and the satisfaction of customary closing conditions and regulatory approvals. Bristol-Myers Squibb and Celgene expect to complete the transaction in the third quarter of 2019.

Following closing, Bristol-Myers Squibb expects to realize run-rate cost synergies of approximately $2.5 billion by 2022. Approximately 55% of those synergies are expected in reductions in sales, general and administration costs with opportunities in commercial efficiencies, central support functions, and geographic optimization. Approximately 35% of the synergies are expected from research and development by optimizing the research and early-stage portfolio and by reducing overlapping resources. The remaining 10% is expected to come from manufacturing through leveraging Bristol-Myers Squibb’s biologics footprint and through operational procurement efficiencies. Separately, Bristol-Myers Squibb expects to execute an accelerated share repurchase program of up to approximately $5 billion, subject to the closing of the transaction, market conditions and Board approval.

Following the close of the transaction, Dr. Caforio will continue to serve as Chairman of the Board and Chief Executive Officer of the company. Two members from Celgene’s Board will be added to the Board of Directors of Bristol-Myers Squibb to bring the total to 13 members. The companies say that the combined company will continue to have a strong presence throughout New Jersey. Bristol-Myers Squibb is globally headquartered in New York and Celgene in Summit, New Jersey.

Source: Bristol-Myers Squibb (January 3, 2019 press release), Bristol-Myers Squibb (January 3, 2019 investor presentation), and Celgene