Overheard -- WSJ

By Charley Grant 

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 (March 20, 2019).

In a nearly 200-page presentation calling for investors to reject Bristol-Myers Squibb's proposed acquisition of Celgene released on Monday, activist hedge fund Starboard Value called Celgene's pipeline of new drugs "unproven." The hedge fund said relying on that pipeline "adds incredible risk" for Bristol-Myers and could force additional acquisitions in the future. One example Starboard cited is Merck & Co.'s $41.1 billion deal for Schering-Plough back in 2009.

Don't tell that to Merck's shareholders. The company acquired the cancer drug Keytruda as part of that deal and, while it wasn't on most people's radar back then, things have most certainly changed: Since the drug reached the market in 2014, Keytruda sales have topped $13 billion. Wall Street analysts expect another $87 billion in cumulative sales through 2024, according to FactSet.

Given that history, Bristol-Myers shareholders ought to hope the Celgene deal is similarly unwise.

Corrections & Amplifications Merck & Co. acquired Schering-Plough for $41.1 billion in 2009. An earlier version of the article incorrectly said the purchase price was $47 billion. (March 19, 2019)

Write to Charley Grant at [e-mail]

(END) Dow Jones Newswires

March 20, 2019 02:47 ET (06:47 GMT)

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