Summary
- Celgene has been struggling in its oncology segment.
- 23% of assets are in goodwill, with the risk of a writedown.
- Starboard Value is calling shenanigans and could sue to stop the April 12th vote.
- Both companies could be hurt longer term if the merger goes through.
The April 12th vote for the $74 Billion Bristol-Myers Squibb (BMY) - Celgene (CELG) merger is fast approaching, and activist investors against the deal are calling shenanigans. Hedge Fund Starboard Value is leveling accusations of empty voting, which is when shares of a company are bought just to influence an upcoming vote. If it can be proven, it can file suit before the voting deadline. For the sake of Bristol-Myers shareholders, let’s hope that Starboard Value can prove its case and stop the vote.
Wellington Management has also voiced its displeasure for the deal. While it is common for some investors to be against this type of megamerger, this one is especially important because of the sheer size of the transaction, along with bringing up an overlooked issue with passive management. The tension around the deal has more to do with Celgene than with Bristol-Myers Squibb.
