Friday was a major day in the healthcare market as one of the biggest mergers in that space has just received the go-ahead from the Federal Trade Commission (FTC). Bristol-Myers Squibb (NYSE: BMY) and Celgene (NASDAQ: CELG) announced on Friday that the FTC had cleared their planned $74 billion mega-merger, a deal which would combine both companies already substantial cancer businesses under one corporate umbrella.
The two companies won U.S. antitrust approval for their planned merger, a piece of news that was well received by both companies. The only condition that the FTC stipulated was that Celgene needed to sell off its psoriasis drug Otezla to another company, but besides this, the agency gave the two companies complete regulatory approval to go ahead. Another biotech giant, Amgen, has also agreed to buy Celgene’s Otezla business in a separate transaction estimated at $13.4 billion.
Bristol-Myers first announced that it would try buying Celgene back in January, a piece of news that actually worried many investors. Although this would combine the world’s two largest cancer drug businesses under a single corporate entity, investors were worried that this was a significant amount of debt for a company to be taking on. However, this is offset by the strong drug candidate portfolio that Bristol-Myers will be adding after it acquires Celgene. Considering that the cancer treatment market is already getting rather crowded, with most major pharmaceutical companies working on some sort of treatment, Bristol’s acquisition of Celgene and its cancer business could give it an edge over its competitors.
“Today’s news is an exciting milestone in our company’s history as we look forward to officially combining with Celgene to create a leading biopharma company,” said Giovanni Caforio, M.D., Chairman and CEO of Bristol-Myers. “Together we will be well positioned to discover, develop and deliver innovative medicines, and to transform the lives of more patients through science.”
The five members of the FTC antitrust committee in question voted 3 to 2 in favor of the deal, with the decision being split along partisan lines. The three FTC members that were in favor of the transaction were Republicans, while the remaining two that voted against it were Democrats. Now that this merger has officially been approved, it wouldn’t be surprising to see other major deals receive approval sometime in the near future.
Other significant mergers in the healthcare market include AbbVie, which is currently working out a deal to acquire Botox maker Allergen, while another healthcare giant, Roche Holdings, has proposed to buy out Spark Therapeutics.
Shares of both Bristol-Myers and Celgene ended up staying more or less the same in response to the news. Both companies have seen steady growth over the past six months, gaining between 10-20% during that period.
Bristol-Myers Company Profile
Bristol-Myers Squibb Co discovers, develops, and markets drugs for various indications, such as cardiovascular, oncology, and immune disorders. A key focus for Bristol is immuno-oncology, where the firm is leading in drug development. Unlike some of its more diversified peers, Bristol has exited several nonpharmaceutical businesses to focus on branded specialty drugs. – Warrior Trading News
