Serial Investor Carl Icahn Takes Stake in Bristol-Myers Squibb, Stock Jumps
February 22, 2017
By Alex Keown, BioSpace.com Breaking News Staff
NEW YORK – Hours after Bristol-Myers Squibb announced a $2 billion stock buyback plan on Tuesday, billionaire investor Carl Icahn snapped up a “large stake” of BMS stock, which sent shares soaring.
BMS shares jumped as high as $57.21 after being down as much as 2 percent throughout the day, Reuters said. Share prices did drop back on Tuesday to $54.78. According to reports, Icahn acquired the shares because he sees the company as a valid takeover target. How much stock Icahn acquired was not disclosed.
Icahn is the latest in hedge fund activism when it comes to BMS stock. In January, The Street reported Barry Rosenstein of Jana Partners snapped up a chunk of company stock, which some suggested could signal a proxy fight over the company directors. Jana owns about 3.9 million shares of BMS, but Reuters said the investors continue to increase their stake in the company, which is currently at about 1 percent.
Jana and investors like Icahn making significant stock acquisitions adds fuel to the takeover rumors that BMS is a hot property on the takeover market. However, it would require deep pockets to acquire BMS, which is valued at about $92 billion. Four companies have been rumored to be potential suitors, including Pfizer , Gilead Sciences , Novartis AG and Roche . Some analysts, including Deutsche Bank’s Gregg Gilbert and Esther Rajavel have suggested Pfizer is not a serious candidate for a potential acquisition because of costs and the need for “a more diverse set of value drivers.”
BMS has gone from the fourth most valuable pharmaceutical company in the United States to the ninth, according to a recent report by Bloomberg. Much of that has to do with a major setback the company had last year with its lead PD-1 inhibitor Opdivo. In August 2016, BMS announced Phase III data showing Opdivo failed to meet its endpoints of progression-free survival in lung cancer patients expressing PD-L1 at 5 percent. Since the failure, BMS share prices have fallen and the company has lost more than $30 billion in market cap.
In addition to the stock buyback plan, BMS also announced on Tuesday that it would add three new members to its board of directors, something that Reuters said came out of leadership talks with Jana investors. In a statement on Tuesday, BMS Chief Executive Officer Giovanni Caforio said the new directors add “important experience and skills” in managing the company’s businesses and operations. He said the directors will also “broaden our overall expertise in the pharmaceutical sector and more broadly in capital markets, and complement extremely well the existing skills on our board.”