Bristol-Myers Squibb Co. brand medication sits on a pharmacy shelf. (Photographer: George Frey/Bloomberg)

Starboard Value Is to Take Stake in Bristol-Myers Squibb

(Bloomberg) -- Starboard Value has taken a stake in Bristol-Myers Squibb, the pharmaceutical giant that agreed to acquire Celgene Corp. in a record $74 billion deal last month, according to people with knowledge of the matter.

The size of the stake and any plans that Jeff Smith’s activist hedge fund might have for its investment in the $81 billion drugmaker couldn’t immediately be learned.

A representative for New York-based Bristol said the company had no immediate comment. A representative for Starboard didn’t respond to requests for comment.

Purchasing Celgene will give Bristol control of one of the most successful cancer drugs of recent years, the top-selling blood-cancer therapy Revlimid, which costs more than $100,000 a year. But that drug is the subject of patent litigation which has the potential to open it up to generic competition.

Bristol shares fell 14 percent on Jan. 3 when the deal, which valued Celgene’s stock at a 54 percent premium to its previous closing price, was announced. Bristol closed Friday at $49.89, less than 5 percent below its pre-announcement level.

"One thing they may be trying to do is to push Bristol to consider a sale," said Bloomberg Intelligence analyst Sam Fazeli. "But there are only a very few companies that can actually do that. Namely, AbbVie, Pfizer and Novartis -- but all these would require a lot of synergies to be accretive."

Founded by Smith and Mark Mitchell in 2002, New York-based Starboard has waged past activist campaigns at companies including Macy’s Inc. and Yahoo. Its current investments include casino operator MGM Resorts International, where it plans to push for changes, and online auto-dealing platform Cars.com Inc. which it has called on to improve performance or consider selling itself.

Its health-care holdings span managed care specialist Magellan Health Inc. and Perrigo Co., according to the firm’s latest regulatory filing.

Last April, it reached a settlement with Crock-Pot maker Newell Brands Inc. after a months-long battle that included billionaire activist Carl Icahn wade into the fight.

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