Bristol-Myers Squibb has said it would buy Celgene Corp for about $74 billion, creating a pharma company with several blockbuster cancer drugs and making it one of the biggest mergers on record in the sector.
Bristol-Myers pioneered cancer immunotherapy with its Yervoy and later Opdivo but has come under pressure as Merck & Co's rival treatment Keytruda moved ahead in market share in lung cancer treatment, the most lucrative oncology market.
The deal will create a company with nine treatments bringing in more than $1 billion in annual sales and a significant potential for growth in oncology, immunology and inflammation and cardiovascular disease.
Celgene shareholders will receive one Bristol-Myers Squibb share and $50 in cash for each share held, or $102.43 per share, a premium of 53.7% to Celgene's close yesterday.
Celgene shareholders will also receive one tradable contingent value right for each share held, which will entitle them to receive a one-time potential payment of $9 in cash upon regulatory approval of ozanimod and liso-cel by 31 December 2020 and bb2121 by 31 March 2021.
Talks opened in September, with Bristol-Myers approaching Celgene, according to a source familiar with the matter.
Last year, Celgene bought experimental cancer drug developer Juno Therapeutics for $9 billion, betting on its chimeric antigen receptor T-cell therapy, known as CAR-T.
Bristol-Myers said it expects to speed up a share repurchase programme of up to about $5 billion, subject to the closing of the transaction, market conditions and board approval.
The companies expect to close the deal in the third quarter of 2019. The cash portion will be funded through a combination of cash on hand and debt financing.
Bristol-Myers Squibb has obtained fully committed debt financing from Morgan Stanley Senior Funding and MUFG Bank.
Morgan Stanley & Co is the lead financial adviser to Bristol-Myers, and Evercore and Dyal Co are its financial advisers. Kirkland & Ellis is its legal counsel.
JP Morgan Securities is serving as lead financial adviser and Citi is the financial adviser to Celgene. Wachtell, Lipton, Rosen & Katz is its legal counsel.