February 16, 2019
By Svea Herbst-Bayliss and Greg Roumeliotis
(Reuters) – Activist hedge fund Starboard Value LP has asked a proxy solicitor to probe the level of support among Bristol-Myers Squibb Co shareholders for the U.S. drug maker’s $74 billion deal to buy Celgene Corp, people familiar with the matter said on Friday.
The acquisition would be the biggest pharmaceuticals deal ever and would unite two major sellers of cancer drugs.
Starboard has not decided whether it would oppose the Celgene deal, the sources said. The fund, run by Jeff Smith, may take no action, the sources added.
Bristol-Myers shareholders will vote on the Celgene deal in April. While Celgene shares are pricing in some uncertainty over whether it will be completed, no major Bristol-Myers shareholder has voiced opposition publicly to the deal so far.
As of the end of trading on Friday, Bristol-Myers’ cash-and-stock offer valued Celgene at $101.67 per share. Celgene shares ended trading at $90.69.
The sources asked not to be identified because the matter is confidential. Bristol-Myers and Starboard did not immediately respond to requests for comment.
Last week, Smith told CNBC in an interview that Starboard was “certainly interested in the story at Bristol-Myers.” He declined to say whether the firm had a position it the stock.
“We evaluate those situations to determine whether we can have a positive impact. Bristol-Myers might fit that profile. It might not fit that profile. We haven’t made that decision,” Smith said.
Starboard has a track record of opposing deals. It tried to block Virginia-based meat giant Smithfield Foods’ sale to Chinese company Shuanghui International in 2013, as well as aircraft component maker Rockwell Collins Inc’s acquisition of B/E Aerospace two years ago. Both deals were done.
The presence of an activist investor can encourage potential deal interlopers to step in. However, no rival suitor has so far emerged publicly, either for Bristol-Myers or for Celgene.
“Our impression from (Bristol-Myers) management’s long-term focus and biopharma executive commentary is that the probability of a third party buyer for Bristol-Myers before the Celgene vote in April is very low,” BMO analysts wrote in a research note on Thursday.
“We do not believe an activist can change that.”
Starboard is known for being an influential investor that often pushes for operational improvements. It scored a boardroom coup at Darden Restaurants where it ousted all board members five years ago.
(Reporting by Svea Herbst-Bayliss and Greg Roumeliotis in New York; editing by Diane Craft)