Replies to post #86299 on Biotech Values

[p3analyze]

Question BMY split off MJN - where does the money come from?


RPT-UPDATE 1-Bristol-Myers to spin off Mead stock
Sun Nov 15, 2009 8:04pm EST

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NEW YORK, Nov 15 (Reuters) - Bristol-Myers Squibb Co (BMY.N: Quote, Profile, Research, Stock Buzz) said on Sunday it plans to split off its 83 percent stake in Mead Johnson Nutrition Company (MJN.N: Quote, Profile, Research, Stock Buzz) in a deal that lets Bristol shareholders exchange their shares for Mead Johnson common stock.

Under terms of the offer, for each $1.00 of Bristol-Myers common stock accepted in the exchange offer, the tendering shareholder will receive about $1.11 of Mead Johnson common stock.

The exchange ratio will be determined by a 10 percent discount to the average of the daily volume-weighted average price of Bristol-Myers Squibb common stock and Mead Johnson common shares over a three-day period expected to be Dec. 8, 9, and 10, 2009.

Based on the 170 million shares of Mead Johnson owned by Bristol, and Mead Johnson's closing stock price on Friday, Nov. 13, of $45.25 on the New York Stock Exchange, the market cap of the stake that is being spun off would be about $7.69 billion. But the proceeds will depend on how many shares are tendered.

The company said the exchange "is generally expected" to be tax-free to shareholders, and is expected to be accretive to earnings in 2010.

"Now is the right time to move forward with a split-off, given the excellent performance of Mead Johnson since the IPO earlier this year and our confidence in the current and future performance of our biopharmaceuticals business," Bristol Chief Executive James M. Cornelius said in a statement.

"With a successful execution of this split-off, we fully consider ourselves a BioPharma company," he said.

The completion of the exchange offer is subject to certain conditions, including that at least 144.5 million shares of Mead Johnson common stock will be distributed in the exchange. (Reporting by Jui Chakravorty; Additional reporting by Jessica Hall in Philadelphia; Editing by Jan Paschal)