By Ankur Banerjee and Michael Erman
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 percent to Celgene's Wednesday close.
Bristol-Myers shares fell 13 percent at $45.20, while Celgene shares rose 30.5 percent at $87 in premarket trading.
Celgene shareholders will also receive one tradeable 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 Dec. 31, 2020 and bb2121 by March 31, 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 program 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 Inc and MUFG Bank Ltd.
Morgan Stanley & Co. LLC is the to Bristol-Myers, and Evercore and Dyal Co. LLC are its financial advisers. Kirkland & Ellis LLP is its legal counsel.
J.P. Morgan Securities LLC is serving as and Citi is the financial adviser to Celgene. Wachtell, Lipton, Rosen & Katz is its legal counsel.
(Reporting by Ankur Banerjee in Bengaluru; Editing by Arun Koyyur)
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)