M&A

Starboard plots board coup after buying into Bristol-Myers in lead-up to Celgene buyout vote

Activist investor Jeff Smith inserted himself into the M&A dance between Bristol-Myers Squibb and Celgene at the beginning of this month, when Bloomberg reported that his hedge fund, Starboard Value, had invested an unknown amount of cash into the pharma giant. And now Starboard is making a move on Bristol-Myers’ board, stoking fresh speculation about his intentions regarding the $74 billion buyout.

Starboard has nominated Smith, alongside four other directors, to Bristol Myers’ 11-member board, according to an SEC filing. They include Intellia CEO John Leonard, Deerfield executive advisor Janet Vergis as well as Steven Shulman and James Tyree, both healthcare veterans now running their own investment firms.

The previously mysterious amount of shares Starboard owns? One million and counting.

With a stock ownership that translates to less than 1% of the company, any power that Starboard yields over Bristol-Myers Squibb — and its controversial $74 billion bid for Celgene — would depend on a board makeover.

Starboard has yet to announce its stance on the buyout, but it has been going around evaluating Bristol-Myers shareholders’ opinion about the merger, Reuters reported days ago. The firm has also met with Bristol-Myers management on “multiple occasions,” the filing revealed. And if his track record is any indication, Smith does not shy away from drastic pivots to steer portfolio companies when he thinks they are straying from the path of ultimate profitability.

Shareholders of each company are scheduled to meet and vote (separately) on the merger on April 12. The annual meeting of stockholders will take place some time after that, Bristol-Myers wrote.

Bristol-Myers $BMY and Celgene $CELG stocks are both down less than 1% on the news.


Jeff Smith. STARBOARD


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