Starboard Nominates Bristol Board Members -- WSJ
February 21 2019 - 3:02AM
Dow Jones News
By Cara Lombardo and Micah Maidenberg
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (February 21, 2019).
Activist investor Starboard Value LP is unhappy with
Bristol-Myers Squibb Co.'s deal to buy rival Celgene Corp., and it
has moved to install its own set of directors at Bristol-Myers.
The hedge fund has nominated five potential directors, including
its chief executive, Jeffrey Smith, and has been meeting with the
drugmaker's executives, Bristol-Myers said in a filing
Wednesday.
The activist proposal comes as Bristol-Myers has a deal in place
to buy Celgene that was valued at $74 billion when it was announced
earlier this year. It isn't clear why Starboard nominated the
slate, though the hedge fund is unhappy with the deal, according to
people familiar with the matter.
Activists don't always nominate board members when opposing a
deal. The fact that Starboard did could indicate it has ideas for
alternatives it would hope to implement, one of the people said.
But analysts have said it is unlikely an activist could compel
another company to make a bid for Bristol-Myers itself, partly
because there aren't many potential suitors.
Bristol-Myers told Starboard it would review Starboard's
proposal for the board, and the company and activist have met on
multiple occasions, according to the filing.
Starboard in those meetings has asked the company to help it
understand the rationale of the deal and hasn't expressed an
opinion on it, another person familiar with the matter said. It has
also indicated to the company that it isn't sure of its plans, this
person said.
Successfully challenging the deal could be a long shot for
Starboard by itself. The hedge fund has acquired about one million
shares in the company, Bristol-Myers said, a sliver of its roughly
1.6 billion shares outstanding. Bristol-Myers indicated in the
filing that Starboard, which bought the bulk of its stake Jan. 31,
could also be planning to buy more stock.
Bristol-Myers shareholders are set to vote on the deal with
Celgene on April 12, and a majority of the shares voted need to
approve the deal for it to pass.
Should Starboard be looking to challenge the deal, it would need
to garner significant support from other shareholders given its
relatively small position. A handful of other shareholders are
unhappy with the deal, including the fifth-largest shareholder,
Dodge & Cox, according to the people familiar with the matter.
But that doesn't necessarily mean they will vote against it.
Shareholders who own Bristol-Myers shares as of March 1 will be
permitted to vote, meaning there is still a window for investors
opposed to the deal to buy shares to vote against it.
Bristol-Myers and Celgene announced their proposed combination
on Jan. 3, touting the benefits of combining two major sellers of
cancer drugs. The deal is expected to be completed in the third
quarter this year. Bristol-Myers shareholders were cool on the deal
when it was announced, driving the company's stock down 14%, though
it has been climbing in recent weeks.
Starboard has agitated for change at a range of companies,
including Dollar Tree Inc., semiconductor company Mellanox
Technologies and Cars.com, though it is rare for Starboard to
target a company as large as Bristol-Myers, which has a roughly $84
billion market value.
Shares of Bristol-Myers closed down 0.12% at $51.30 Wednesday,
while Celgene shares fell 0.32% to $90.40.
Write to Cara Lombardo at cara.lombardo@wsj.com and Micah
Maidenberg at micah.maidenberg@wsj.com
(END) Dow Jones Newswires
February 21, 2019 02:47 ET (07:47 GMT)
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