In the first big pharmaceutical deal of the year, the pharma giant Bristol-Myers Squibb has snapped up the biotech giant Celgene in a $74 billion deal.
Celgene shareholders will get one BMS share and $50 cash for each Celgene share they own, valuing the New Jersey-based Celgene at about $102.43 a share, according to the companies. That’s about 54% more than Celgene’s closing price on Wednesday.
The deal combines two companies that have made a lot of investments in cancer drugs, but both have faced challenges to their stock price amid competition.
The New York-based Bristol-Myers has faced stiff competition from companies such as Merck in an area of cancer treatment known as cancer immunotherapy. Two BMS drugs, Opdivo and Yervoy, harness the body’s immune system to treat cancer.
“As a combined entity, we will enhance our leadership positions across our portfolio, including in cancer and immunology and inflammation,” BMS CEO Giovanni Caforio said in a news release Thursday.
Read more: Why Bristol-Myers Squibb is making a big bet its approach to treating lung cancer is the right one
Celgene had a tough 2018, even after doing big-ticket deals like the $9 billion acquisition of Juno Therapeutics and the $7 billion purchase of Impact Biosciences. In 2018, Celgene’s stock fell about 40% and the company faces competition for its blockbuster cancer treatment, Revlimid.
BMS and Celgene said they were expecting near-term launches of new drugs to make up $15 billion in revenue.
BMS also said it was expecting to realize $2.5 billion in synergies by 2022. Synergies indicate areas where investment bankers or the firms involved in the deal have identified redundancies or opportunities to make the combined company leaner, thus saving on costs.
While synergies can also mean cutting redundancies in things like software and machinery, a large chunk of the savings typically comes from reduced employee headcounts.
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