Bristol-Myers Came Out of the Grip of JANA Partners, but Fell into the Hands of Carl Icahn

The very day when Bristol-Myers Squibb Co. added three directors to its board to satisfy JANA Partners LLC, an activist investor, another one took a stake in the company. This time around, it’s Carl Icahn who has taken the stake, though the size of the stake is not known yet. Those who are familiar with the happenings say that Icahn has made this move as he finds the company as a vulnerable takeover target.

The developments, however, resulted in company’s shares rising to touch $57.21.

The appearance of Icahn on the circuit surprised the executives of Bristol-Myers too who were already dealing with the changes in the board and the repurchase of $2 billion in stocks as was negotiated with Jana Partners. All this exercise was meant to avoid the potential clash with the activist investor whose stake in the company is now valued somewhere between $500 million and $1 billion.

The company is also trying to get over the costly failure it made in its effort to develop the lung cancer immunotherapy treatment Opdivo. When the result of the clinical study for this was made public in August 2016, the company lost $37 billion in the stock market. This treatment was supposed to outperform chemotherapy, but the trials proved otherwise.

Bristol-Myers is a pioneer when it comes to developing immunotherapies where the body’s immune system is used to fight cancer. Today these therapies are much in demand and the rivals of the company are trying real hard to catch up. This is because these treatments according to the analysts’ estimate mean an annual sales figure of some $20 billion.

If Mr Icahn gets Bristol-Myers to the auction table then only a few companies will be able to afford the price tag of at least $100 billion. The industry, which is known for the merger activity, has a real action-packed year in 2015 when deals worth half a trillion in total were announced. Last year was a bit subdued one with the largest deal of $24 billion happening between Abbott Laboratories and St. Jude Medical Inc.

After a quiet year, the activist investors are again active and this year is seeing their moves quite early. Icahn probably believes that the New York drug giant has real good options in the pipeline. This will result in making it an attractive target for a takeover.

But, it looks like that the 81-year-old investor is planning a big bite as the company is worth $90 billion. After his targeting of Apple Inc., this will be his second-largest target.

 

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