Apparently, positive word from influential proxy advisory firms was enough to put the nail in the coffin on Starboard Value's campaign to scuttle the mammoth Bristol-Myers Squibb-Celgene merger.
Friday, the rebel investor said it would stop soliciting BMS shareholders to vote against the tie-up—and it blamed Institutional Shareholder Services (ISS) and Glass Lewis, who came out earlier in the day in support of the deal, for thwarting its campaign.
"We are extremely disappointed by the conclusions reached by the proxy voting advisory firms,” it said in a statement, adding that “despite the substantial swell of support against this transaction, it is extremely difficult for shareholders to prevail without a supportive recommendation from ISS and Glass Lewis to vote against."
The concession ends a battle between Starboard and Bristol that began earlier this year when Starboard nabbed a stake in the New Jersey drugmaker in response to the Celgene agreement. Starboard went on to argue that picking up Celgene, with its Revlimid patent uncertainties, was a risky move, and that BMS had better options for creating value.
Bristol-Myers stood its ground, touting the combined company as a future leader in areas including oncology and immunology. ISS, meanwhile, praised the deal’s “sound” strategic rationale and cost-cutting potential, and Glass Lewis said the buy "presents the opportunity for potentially significant returns to shareholders of the combined company.”
Analysts, for their part, were never swayed by Starboard’s logic that Bristol could do better without Celgene, absent a Big Pharma player willing to snap up the company in a buy of its own.
“The recommendation today significantly increases the chances of a deal close as much of the shareholder votes will be inclined to side with ISS, in our view,” Jefferies analyst Michael Yee wrote to clients Friday before Starboard’s announcement.
Of course, as Starboard reminded investors, they can still vote against the deal at Bristol’s special meeting this month—and the hedge fund itself intends to do just that. “We continue to feel strongly that the proposed transaction between Bristol-Myers and Celgene Corporation is a bad deal for shareholders that carries too much risk,” it said.