Replies to post #86329 on Biotech Values

[DewDiligence]

BMY:

Can the share buy-back be a take-over defense mechanism as well?

I don’t think so; if anything, the stock swap should make BMY a more attractive buyout target because the acquiring company will not have to decide what to do with MJN.

Who do you think will be the most likely suitor?

SNY, NVS, or GSK.

Would the suitor want to wait till after the Apixaban and Ipilimumab trial results to come out? Does the timing of this split-off suggest the company believe those trials will be positive which would make BMY current shares undervalued? Why would a BMY shareholder tender shares if they also believe the same?

With a company as large as BMY, there are always pending clinical developments that could be material to an M&A transaction; however, I don’t think the timing of BMY’s decision to split-off MJN was heavily influenced by Apixaban and Ipilimumab. Rather, I think BMY was waiting for MJN’s shares to establish a lofty valuation following the IPO in Feb 2009.