When it comes to the biggest acquisitions that are valued at tens of billions of dollars, there is almost always a bit of trouble in completing the whole thing. First of all, there is the matter of the two company’s shareholders who might or might not want the deal to happen, while on the other hand, there are regulatory approvals related to fair competition that are also paramount for such deals to be completed. American pharmaceutical giant Bristol-Myers Squibb’s plan to acquire Celgene in a deal worth a mammoth $74 billion has had its fair share of pitfalls and now the company finds itself in a bit of difficulty.
The setback has hit BMS despite having gathered 75% of the shareholder’s votes in favor of the acquisition. It has emerged that one of the company’s most ambitious products in the form of Opdivo, which is meant for cancer immunotherapy for liver cancer patients, has had a setback in a late-stage clinical trial. On the other hand, the acquisition has hit a roadblock after it emerged that BMS was going to spin off one of Celgene’s most lucrative products in order to alleviate antitrust concerns. The product in question is Otzela and it is projected to generate $2 billion in sales in 2019. Moreover, it is being reported that the deal could be completed in the early part of 2020 instead of the end of 2019, as was originally expected.
The setback to its plan to acquire Celgene had a negative effect on the BMS as it plunged by almost 7.5% and wiped out $6 billion from the company’s valuation. BMS released a statement after witnessing the panic in the markets. The pharmaceutical giant stated,
Bristol-Myers Squibb reaffirms the significant value creation opportunity of the acquisition of Celgene. Together with $2.5 billion of cost synergies, a compelling pipeline and a strong portfolio of marketed products, the company continues to expect growth in sales and earnings through 2025.
It remains to be seen whether the statement can calm the markets over the coming days.