Business Context and Reporting Period
This Form 8-K, dated November 20, 2019, reports the completion of the acquisition of Celgene Corporation by Bristol-Myers Squibb Company (BMS). The transaction closed on November 20, 2019, making Celgene a direct wholly-owned subsidiary of BMS.
Key Financial Metrics and Transaction Details
- Total Merger Consideration: Approximately $35.74 billion in cash, 714.9 million shares of BMS Common Stock, and 714,909,545 Contingent Value Rights (CVRs) issued to former Celgene shareholders.
- Equity Award Consideration: Approximately 137.4 million shares of BMS Common Stock and 43.4 million CVRs issued to former Celgene equity award holders.
- Debt Financing: BMS borrowed $8.0 billion under its Term Loan Credit Agreement to fund a portion of the cash consideration.
- Share Repurchase: BMS entered into accelerated share repurchase (ASR) agreements to repurchase $7.0 billion of its Common Stock.
- CVR Terms: New CVRs issued in the merger represent the right to receive $9.00 in cash per right if specified milestones are achieved.
Material Changes and Transaction Structure
The primary material change is the consolidation of Celgene into BMS. The merger consideration for each Celgene share consisted of $50.00 in cash, one share of BMS Common Stock, and one CVR. Existing Celgene equity awards were converted into BMS equity awards and CVRs based on specific exchange ratios (1.86 for in-the-money options and 1.87 for out-of-the-money options).
BMS also assumed Celgene's existing obligations regarding Contingent Value Rights (Celgene CVRs) related to the Abraxis BioScience acquisition, which entitle holders to cash payments based on net sales of Abraxane and pipeline products exceeding specific thresholds.
Outlook, Risks, and Contingencies
- Future Payments: BMS is obligated to make potential future cash payments under the new CVR Agreement if specified milestones are met. Additionally, BMS assumed the obligation to pay Celgene CVR holders based on future net sales of Abraxane.
- Share Repurchase Settlement: The $7.0 billion ASR transaction is scheduled to terminate in the second quarter of 2020. The final number of shares repurchased will depend on the average daily volume-weighted average price of BMS stock during the term.
- Financial Reporting: Pro forma financial information and financial statements of the acquired business are not included in this filing but are expected to be filed within 71 calendar days.
Investor Verification Checklist
- Verify the specific milestones required to trigger the $9.00 cash payment per CVR in the new CVR Agreement (Exhibit 4.1).
- Review the terms of the Term Loan Credit Agreement to understand interest rates and repayment schedules for the $8.0 billion borrowing.
- Monitor the settlement of the $7.0 billion accelerated share repurchase to determine the final share count reduction.
- Assess the impact of assuming Celgene's Abraxis-related CVR obligations on future cash flow based on Abraxane sales performance.
- Check for the upcoming filing of pro forma financial information to understand the combined entity's financial position.