Pharma Can BMS rebels scuttle its Celgene buy? Analysts do the math—and so far, the votes don't add up

Bristol-Myers Squibb shareholders panicked on Wednesday when its largest institutional shareholder, Wellington Management, came out against its $74 billion acquisition of Celgene—and activist hedge fund Starboard Value immediately followed suit. Now, BMS is reportedly stepping up its efforts to calm investors' nerves, meeting with institutional shareholders in New York and Boston this week, according to CNBC sources.

But could Wellington and Starboard really halt the deal, which comes up for an investor vote on April 12?

The answer is no—at least according to a slate of Wall Street analysts who crunched the numbers after Wellington announced its opposition. Sure, the influential investor’s negative opinion could persuade some on-the-fence voters, but Wellington is still facing an uphill battle, they said.

"Wellington, even combined with similarly positioned funds, lacks the votes to sway the deal outcome," wrote analysts at Atlantic Equities in a Thursday investor note. They did the math in Wellington’s SEC filing and found that even though the firm said it has "investment discretion" over nearly 8% of BMS’ outstanding shares, it has shared voting power over only 1.7% of them.

Dodge & Cox reportedly opposes the deal, too, but it owns just 2.6% of shares. And Starboard Value's voting power is even more limited, the Atlantic analysts said.

Then there’s another problem that could seriously hamper Wellington’s ability to sway undecided voters: "We see Wellington's grounds for opposition as raising no specific or credible reasons why the deal should not go through."

In a statement announcing its opposition on Wednesday, Wellington said it believed the deal requires BMS shareholders to take on too much risk and Celgene shareholders to accept BMS shares "at a price well below implied asset value." Wellington also contended that making the merger a success will be more difficult than BMS’ executives have suggested it will be.

A spokesperson for BMS did not comment to FiercePharma on reports that it's stepping up meetings with investors. In a statement issued late Thursday, Bristol-Myers said its Celgene merger "is consistent with our strategy and is the natural next step" in the company's evolution.

Reiterating its initial justification for the deal, BMS touted six potential drug launches—including five from Celgene—that together represent more than $15 billion in potential sales. The combo will also "enhance our leadership positions across our portfolio, including in oncology, immunology and inflammation and cardiovascular," the company said.

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