What is the significance of the Contingent Value Rights (CVRs) issued by BMY in this transaction?

The CVRs issued by BMY represent an opportunity for former Celgene shareholders to receive an additional $9.00 in cash per CVR if certain predefined milestones are achieved. These CVRs are tradeable and introduce a mechanism for former Celgene investors to benefit from potential future successes tied to specific performance targets.

How will outstanding Celgene equity awards be treated after the acquisition?

Outstanding Celgene stock options, restricted stock units, and restricted stock awards were assumed by BMY and converted into awards for BMY common stock. The terms, including exercise prices and number of shares, were adjusted based on specified exchange ratios. In many cases, these converted awards also entitle holders to receive CVRs (or CVR consideration) upon vesting.

What is the purpose of the Accelerated Share Repurchase (ASR) agreements?

The ASR agreements indicate BMY's commitment to returning capital to its shareholders and its confidence in the company's valuation. By repurchasing $7.0 billion worth of its common stock, BMY aims to reduce the number of outstanding shares, potentially increasing earnings per share and signaling financial strength.

What are BMY's obligations regarding the previously existing Celgene CVRs?

BMY has assumed Celgene's obligations under its existing CVR agreement, which relates to the sales of Abraxane® and a related pipeline product. Holders of these legacy Celgene CVRs may receive payments based on net sales exceeding certain thresholds ($1 billion, $2 billion, and $3 billion) and may have already received a milestone payment in 2013. BMY will now be responsible for managing and potentially making payments under this agreement.

BMY 8-K: Leadership Changes, Acquisitions & Dispositions & More

Summary

Bristol Myers Squibb Company (BMY) announced on November 20, 2019, the successful completion of its acquisition of Celgene Corporation. This monumental transaction, initially announced in January 2019, involved a mix of cash, BMY common stock, and contingent value rights (CVRs) for former Celgene shareholders. Each Celgene share was exchanged for $50.00 in cash, one share of BMY common stock, and one CVR. The CVRs represent the potential to receive an additional $9.00 in cash if specified milestones are achieved, introducing an element of future value realization for former Celgene investors. In addition to acquiring Celgene, BMY also entered into agreements for an accelerated share repurchase (ASR) program totaling $7.0 billion, signaling confidence and a commitment to returning capital to shareholders. The company also drew down $8.0 billion under its Term Loan Credit Agreement to fund a portion of the cash consideration for the Celgene acquisition. BMY also assumed Celgene's existing CVR obligations related to Abraxane® and Abraxis pipeline products, which may result in further payments to holders based on future net sales and milestone achievements.

Key Highlights

1Completion of the acquisition of Celgene Corporation for a combination of cash, BMY stock, and Contingent Value Rights (CVRs).
2Former Celgene shareholders received $50.00 cash, 1 share of BMY common stock, and 1 CVR per Celgene share.
3Introduction of new BMY-issued CVRs, potentially worth $9.00 cash per CVR if specific milestones are met.
4BMY entered into Accelerated Share Repurchase (ASR) agreements to repurchase $7.0 billion of its common stock.
5BMY borrowed $8.0 billion under its Term Loan Credit Agreement to finance the Celgene acquisition.
6BMY assumed Celgene's existing CVR obligations related to Abraxane® sales and pipeline products.
7Adjustments were made to outstanding Celgene equity awards, converting them into BMY stock options, restricted stock units, and CVRs.

BRISTOL MYERS SQUIBB CO 8-K Report, Material Agreement (Nov 20, 2019)

Summary

Key Highlights

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