Carl Icahn Takes Stake in Bristol-Myers Squibb -- Update

By David Benoit

Carl Icahn has taken a stake in Bristol-Myers Squibb Co., making him the second big activist to pressure the company following disappointment in its cancer-treatment efforts.

Mr. Icahn owns a large stake and believes 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.

On Tuesday, Bristol-Myers 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.

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, according to a person familiar with the matter. 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. The drug company's market value now stands at about $90 billion.

Mr. 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.

Bristol-Myers pioneered cancer immunotherapy, which aims to fight the disease using the body's immune system, but its recent missteps had critics wondering if it would be surpassed by competitors like Merck & Co. Management has sought to reassure investors that its immunotherapy treatments have a bright future.

On Tuesday, Bristol-Myers said it recruited former senior executives from Bausch & Lomb Inc. and Vertex Pharmaceuticals Inc. -- Robert Bertolini and Matthew Emmens, respectively -- to its board, effective immediately, along with Theodore Samuels, who currently sits on the boards Perrigo Company PLC and Stamps.com.

The Bristol-Myers board will be temporarily expanded to 14 seats, but only 11 directors will stand for election at the company's annual meeting in May. Current Chairman Lamberto Andreotti will retire, as previously announced.

--Imani Moise contributed to this article.

Write to David Benoit at david.benoit@wsj.com

(END) Dow Jones Newswires

February 21, 2017 16:18 ET (21:18 GMT)

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