Icahn Takes Activist Stake In Bristol-Myers, Bets On $90 Billion Takeover

Bristol Myers stock jumped in afternoon trading after the WSJ reported that activist investor and Trump advisor, Carl Icahn, has taken an undisclosed stake in Bristol-Myers Squibb. If confirmed, he would be the second big activist to pressure the company following its recent disappointment in its cancer-treatment efforts. Earlier in the day, the pharma giant announced it would add three directors to its board and buy back $2 billion in stock in a pact with another activist, Jana Partners LLC.

The rationale for the "large stake" investment, according to the WSJ, is that the New York drug giant "has a good pipeline that would help make it an attractive takeover target, people familiar with the matter said. It isn’t clear how big the stake is."

The drug company’s market value now stands at about $90 billion.

The WSJ reminds us that Jana took a stake last year and began pushing for board changes after Bristol-Myers announced in January that a lung-cancer treatment wouldn’t get approval as fast as hoped, resulting in drop in company shares. That warning increased investor fears Bristol-Myers would lose out to rivals in a crucial treatment sphere and contributed to a roughly 30% decline in the stock since July. The shares had fallen by nearly 2% Tuesday afternoon to $53.55 following news of the settlement with Jana.

As the WSJ concludes, "Icahn has a history of successfully pushing for deals among pharmaceutical companies, and his presence on Bristol-Myers’ shareholder register will likely add to recent speculation that a bidder could swoop in following the stock decline. Such a possibility has helped boost Bristol-Myers shares somewhat since January."

The famed investor, who just turned 81, has a history with Bristol-Myers. In 2008, he was a large shareholder in ImClone Systems Inc. and helped rebuff Bristol-Myers’ attempt to buy the company, its partner on an important cancer drug, for $4.7 billion. Instead, Mr. Icahn supported Eli Lilly & Co. when it swooped in to buy ImClone for $6.5 billion.

 

In 2012, Mr. Icahn took a stake in Amylin Pharmaceuticals Inc. and called on the company to explore a sale after it had rebuffed a bid from Bristol-Myers. After the diabetes-treatment maker ran a sales process, it agreed to a higher bid, valued at $5.3 billion, from Bristol-Myers.

Ealier in the day, Bristol-Myers announced it recruited former senior executives from Bausch & Lomb Inc. and Vertex Pharmaceuticals Inc.—Robert Bertolini and Matthew Emmens, respectively, along with Theodore Samuels, who currently sits on the boards Perrigo Company PLC and Stamps.com. As a reminder, it was Icahn's planting of former Bausch & Lomb executive on the Forest Labs board that allowed a series of transactions including an eventual takeover of the company by Actavis, and subsequently Allergan, before ultimately the government had to intervene and block the merger between Allergan and Pfizer.