What happened

Celgene Corp. (CELG) shares rallied 13.5% in March, thanks to easing worries about its megamerger with Bristol-Myers Squibb (BMY -0.68%) being sidelined because of angry investors, according to S&P Global Market Intelligence.

So what

Bristol-Myers announced plans to acquire Celgene for $74 billion in January, sparking a revolt by investors concerned it was overpaying for Celgene's assets and blocking its own ability to be an acquisition target.

A man in a suit shoots into the sky wearing a jet pack.


The criticism was loudest from Wellington Management, a trillion-dollar investment advisor with a 7.7% ownership stake in Bristol-Myers, and Starboard Value, an activist investor that pledged to vote its 1 million shares against the combination. The risk of the deal getting scuttled by these vocal opponents caused Celgene's shares to trade at a steep discount to the deal's value.

The likelihood of the merger collapsing, however, looks small now than it did at the end of February.

On March 29, Institutional Shareholder Services (ISS), an independent advisor that helps institutional investors decide how to vote on shareholder matters, supported the tie-up, causing Starboard Value to throw in the towel on its objections.

ISS is recommending the deal because the merger "significantly enhances BMY's pipeline, raising the number of late-stage drugs from one to six" and "the merger appears logical strategically, and likely to generate more synergies" than potential alternatives.

Now what

Investors don't have to follow ISS advice, but many of the largest owners do. Therefore, it appears the stage is set for a green-light vote when Bristol-Myers investors weigh in on April 12.

If the deal goes through, Celgene investors will receive $50 in cash and one share of Bristol-Myers stock for each share of Celgene they hold. Also, they'll pocket a contingent value right (CVR) that could produce a $9-per-share bonus if three of Celgene's most promising pipeline drugs win approval by a specified date. The multiple sclerosis pill ozanimod and the blood-cancer therapy liso-cel must get regulatory approvals by Dec. 31, 2020, and the multiple myeloma gene therapy bb2121 has to win approval by March 31, 2021.

There's no guarantee Celgene meets those deadlines, but even if it doesn't, it might be wise to buy shares in Celgene still -- if you also want to own Bristol-Myers. That's because Celgene's currently trading at a 3.3% discount to the deal's value, excluding the CVR.