Don't worry about our $19B bond issue, BMS says. With Celgene, we'll have the cash to pay it off

bms
Bristol-Myers Squibb sold $19 billion in bonds on Tuesday, 2019's largest bond issue so far. (BMS)

Bristol-Myers Squibb is taking on a debt load to cover its $74 billion Celgene buyout, and it issued $19 billion in bonds Tuesday to help pay the bill.

Bristol-Myers issued bonds in nine tranches that come due starting next year and stretch all the way out into 2049. In all, Bristol wants to take on $32 billion in new debt itself, plus $20 billion in Celgene debt, to fund the deal, the drugmaker said in a presentation (PDF) outlining the proposed merger.  

But BMS doesn't plan to carry that burden for long. Company executives have said they're planning to quickly put their money to work paying down that load. The combined company would have $45 billion in free cash flow in the first three years after closing, BMS has said.

“Our priorities for capital deployment moving forward include rapidly paying down debt over the next few years, improving our credit metrics, and we expect to continue to increase our dividend,” Bristol CEO Giovanni Caforio said on the company’s first-quarter conference call.

On-Demand Webinar

De-Risking the Solid Form Landscape of an API

This presentation will discuss how predictable stability and solubility can minimize development timelines and cost. Attend to hear about two case studies exemplifying the importance of understanding the hydration space of an API and how hydrate formation may be avoided by development of a robust crystallization procedure.

RELATED: Bristol-Myers scores first big deal of 2019 with $74B buyout of oncology bigwig Celgene

Bristol announced the massive Celgene buy back in early January. In touting the deal, executives said the combined company would be the top player in oncology and cardiovascular diseases, plus a top 5 company in immunology and inflammation. It’d have nine products with more than $1 billion in annual sales plus six near-term launches.

The deal faced activist investor pushback in the months that followed, but investors signed off on the acquisition in April. 

It’s far from the first time a pharma company has issued billions of dollars worth of bonds to finance an acquisition. Roche in 2009 issued $16 billion in bonds to fund its Genentech buy. More recently, Teva Pharmaceutical issued $20 billion worth of bonds to buy Allergan’s generics unit.   

Bristol’s bond deal is the largest in any industry so far this year and 10th-largest of all time, Bloomberg reports.

Suggested Articles

It’s been a rocky road for BMS’ immuno-oncology duo in previously untreated lung cancer, but a new addition to the regimen might hold the ticket.

Novartis’ Zolgensma launch has been anything but boring: First a record price, then a data scandal and now a manufacturing-related delay in Europe.

As CEO Paul Hudson focuses Sanofi's R&D program on immuno-oncology and gene therapies, Sanofi is readying a vaccine plant to make viral vectors.