Bristol-Myers Squibb announces $5.8 Billion acquisition of c

Bristol-Myers Squibb (BMY.N) announced on Sunday its intention to acquire cancer drugmaker Mirati Therapeutics (MRTX.O) for a potential sum of $5.8 billion. This strategic move aims to enhance the diversity of Bristol-Myers Squibb's oncology sector and incorporate drugs that could potentially mitigate the projected decline in revenue resulting from patent expirations in the coming years.

Bristol has agreed to acquire Mirati's portfolio of drugs that focus on targeting the genetic drivers of specific cancers, including their lung cancer medication, Krazati, which received approval in December.

According to Bristol executives, they mentioned in an interview that they found the second compound, MRTX1719, appealing for potential use in certain lung cancer cases.

“We think this really helps complement our oncology portfolio strategically, but it also, financially, helps commercially in the last half of the decade,” said Adam Lenkowski, Bristol's chief commercial officer.

Bristol Myers

The company has announced its intention to acquire Mirati at a price of $58 per share in cash, totalling approximately $4.8 billion. Considering Mirati's existing cash reserves of around $1.1 billion, our payment effectively amounts to an enterprise value of $3.7 billion. We believe this offer to be highly appealing. Additionally, Mirati stockholders will be entitled to receive one non-tradeable contingent value right for each share they hold, potentially adding $12.00 per share in cash, equating to an extra $1 billion in value opportunity, as stated by the company.

Bristol intends to finance the transaction by utilizing a combination of cash and debt, as stated in the company's statement.

In December, the U.S. Food and Drug Administration granted approval to the drug for the treatment of advanced lung cancer in adults. Chris Boerner, Bristol's incoming CEO and current chief operating officer, expressed that Mirati is a significant addition to our diverse oncology portfolio and will contribute to the future growth of Bristol Myers Squibb's pipeline in the latter half of the decade and beyond.

Bristol is making the purchase of Mirati at a time when the shares are currently more affordable compared to their previous value. Mirati's shares reached a peak of $101.3 per share on November 28th and are currently being traded at $60.2 per share. The New York-based company has been facing challenges due to a decrease in demand for two of its leading drugs, namely the blood cancer treatment Revlimid and blood thinner Eliquis, as they now have generic alternatives available in the market.

According to the statement, it is anticipated that the transaction will have a dilutive effect on Bristol's non-GAAP earnings per share, resulting in a decrease of approximately 35 cents per share within the first 12 months following the completion of the transaction.

In April, it was announced that CEO Giovanni Caforio would be stepping down in November and would be succeeded by Boerner. In a move to strengthen its collection of cancer drugs, Bristol acquired drug developer Turning Point Therapeutics last year for a substantial sum of $4.1 billion in cash.