Bristol-Myers Squibb is selling off a blockbuster drug to help its $74 billion merger with Celgene get approved — and now both stocks are tumbling (BMY, CELG)

Brendan McDermid/ Reuters

• Bristol-Myers Squibb announced Monday it would divest one of Celgene‘s most profitable drugs in order to avert regulatory pressure relating to the companies’ proposed merger.
• The New York-based pharmaceutical company announced its agreement to purchase Celgene for $74 billion back in January.
• Bristol-Myers will divest Otezla, a drug used to treat psoriasis, in an effort to work with the Federal Trade Commission to close the deal more quickly, the company said in a statement.
• The news sent shares of both companies tumbling.
• Watch Bristol-Myers Squibb and Celgene trade live.

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Drugmaker Bristol-Myers Squibb is willing to part ways with one of Celgene’s most profitable drugs in order to get the companies’ $74 billion deal approved by regulators. And investors don’t like the sound of that.

Bristol-Myers fell as much as 8% after announcing it plans to sell-off Otezla, one Celgene’s most successful drugs, in an attempt to bring the Federal Trade Commission closer to approving the merger. Celgene lost more than 5%.

Otezla generated $389 million in revenue globally during the first quarter of 2019, according to SEC filings. 

"Bristol-Myers Squibb reaffirms the significant value creation opportunity of the acquisition of Celgene," the company said in a statement. "Together with $2.5 billion of cost synergies, a compelling pipeline and a strong portfolio of marketed products, the company continues to expect growth in sales and earnings through 2025."

The divestiture is intended to fend off antitrust concerns over the merger from the FTC, which is still reviewing the proposed deal. 

In early January, Bristol-Myers announced it would acquire Celgene, and then the firm’s shareholders approved the transaction in April. According to a press release, Bristol-Myers expects to complete the acquisition by the end of 2019 or the beginning of 2020.

Bristol-Myers is down roughly 12% this year.

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Source: Business Insider – feedback@businessinsider.com (Daniel Strauss)