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Bristol Myers' Future Unsure as Carl Icahn Takes Stake

Joseph Lu

Could Bristol-Myers Squibb Company BMY soon be put on the market for sale as activist investor, Carl Icahn, takes interest in the company? Though it is unclear how big of a portfolio Icahn has bought and Icahn’s intention, it is clear that the company is seeing growth after The Wall Street Journal reported the news. Bristol-Myers is currently at $55.37 per share with 1% growth.

Bristol-Myers, a global leader in biopharmaceuticals and pioneer in cancer immunotherapy, which aims to fight the diseases using the body’s immune system, has lost $37 billion in stock-market value, since they announced the significant setback in a clinical study in the combination of Opdivo and Uervoy, their products for first-line lung cancer.

Investors and analysts saw the delay as an opportunity for rival company like Merck & Co. MRK to get ahead. Despite the major loss in stock-market value, Bristol-Myers still had a revenue growth of 17% from $16.5 billion a year ago to $19.4 billion for 2016.

On the same day that Icahn announced his interest in Bristol-Myers, the company had announced that it would add three seats to the board of directors, making it a total of 14 seats, and buy back $2 billion in stock in a pact with another activist investor, Jana Partners LLC.

Jana Partners, a New York based investing firm, started building a stake last year and now holds a value between $500 million to $1 billion, reported by The Wall Street Journal. Jana started pushing for management change when the company released their yearly earnings and stated that they would not pursue an accelerated regulatory pathway for their first-line therapy, and instead for a broad program that combines their product with chemotherapy.

Icahn, who has a successful history in pushing deals among pharmaceutical companies, believes that the company has a good potential to become an “attractive takeover.” Interestingly enough, he had been on the opposite ends of Bristol-Myers when it comes to investing. He convinced two companies to reject the company’s offer or hold out for the higher ones.

The healthcare sector has always been a fruitful sector. In 2016, $298 billion were announced in health-care related deals. In the market, drugs for lung cancer patient are one of the biggest markets. Bristol-Myers currently has a market value of more than $90 billion.

Icahn’s involvement sparked speculation of sale of the company; however, only a small number of companies can afford the price tag of at $90 billion. If Icahn does push for a sale, it would push the stock price up even higher.

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