Celgene/Bristol-Myers holder Vanguard in ‘early days’ of analysis, source says

11 March 2019 - 05:51 pm UTC

Major Bristol-Myers Squibb [NYSE:BMY] investor Vanguard Group is still in “relatively early days” of analyzing the pharma company’s proposed acquisition of Celgene [NASDAQ:CELG], said a source familiar with the matter.
 
The asset management firm, as it does for all contested situations, is following the situation closely, this source said. The USD 74bn cash and stock merger requires votes from Bristol-Myers and Celgene investors. The meetings are currently scheduled for 12 April.
 
In general, in proxy voting matters, Vanguard funds individually decide how they will vote by taking into account the funds’ interests on a standalone basis, said the first source and a second source familiar with the matter. Each fund may have different interests and expect a different impact from a particular proposal than other Vanguard funds.
 
Vanguard funds typically wait until the “ink is dry” to make voting decisions, the first source said, adding that new developments can sometimes occur up until the last minute in contentious situations.
 
Since announcing plans to acquire Celgene in January for an over 50% premium, Bristol-Myers has come under fire from some investors who have urged shareholders to vote against the deal.
 
Wellington Management, which manages a healthcare fund for Vanguard among others, took the rare step of publicly announcing its opposition in February. Though Wellington holds 7.7% of Bristol-Myers’ voting stock, the firm exercises shared voting control over just 1.7% of the company’s shares, according to its 13D filing.
 
Activist investor Starboard Value followed by releasing a letter against the deal, citing, among other issues, concerns about the patent cliff facing key Celgene product Revlimid, as well as the apparent riskiness of the target’s product pipeline.
 
One of the world’s largest asset managers, Vanguard is in aggregate a top holder of Bristol-Myers shares through numerous funds managed internally and by sub advisors. Its funds collectively are also a top five holder of Celgene shares.
 
Vanguard declined to comment on the deal. Bristol-Myers declined to comment. Celgene did not return a request for comment.
 
by Hanqing Chen and Yiqin Shen