Activist investor Starboard Value says it will oppose Bristol-Myers' deal for Celgene

Jeffrey Smith, chief executive officer and chief investment officer at Starboard Value LP.

David Paul Morris | Bloomberg | Getty Images

Jeffrey Smith, chief executive officer and chief investment officer at Starboard Value LP.

Activist investor Starboard Value said Thursday that it intends to use its stake in Bristol-Myers Squibb to oppose the drug-maker’s acquisition of Celgene.

“Bristol-Myers is deeply undervalued and the recent announcement of the Company’s proposed acquisition of Celgene Corporation is poorly conceived and ill-advised,” Starboard CEO Jeffrey Smith wrote in a letter to Bristol-Myers shareholders. The activist fund has also nominated a slate of director candidates that it hopes to elect at Bristol’s 2019 annual shareholder meeting.

Smith argued that Starboard was “surprised” to hear of the proposed acquisition on the heels of what he characterized as poor financial and stock price performance over the last few years. Bristol-Myers announced in January a deal to buy Celgene valued for a record $74 billion.

“The actions we are taking – specifically, our intent to solicit shareholders to block the proposed acquisition of Celgene – are not taken lightly,” Smith added. “This view has been solidified by the numerous other large, long-term shareholders who appear to likewise believe this deal is not in the best interest of shareholders.”

Investment firm Wellington Management also announced its opposition to the Bristol-Myers acquisition in a release on Wednesday. Wellington said that it “does not believe that the Celgene transaction is an attractive path towards” business that “secures differentiated science and broadens the future revenue base.”

Bristol-Myers stock rallied more than 1.5 percent and Celgene sank 8.2 percent following the release of Starboard’s letter.

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