Wellington Management has $1 trillion under management and is one of the world’s largest independent investment management firms. The firm serves as investment advisor to over 2,150 institutions in over 60 countries, as of 30 December 2017. Clients include central banks and sovereign institutions, pension funds, endowments and foundations, family offices, fund sponsors, insurance companies, financial intermediaries, and wealth managers.
It recently informed the Board of Directors of Bristol-Myers Squibb (BMS) it is not supportive of their proposed acquisition of Celgene. Wellington owns approximately 8% of BMS. It opposes a Celgene merger due to the following reasons- 1) the transaction asks investors to accept too much risk 2) successful execution would be far more difficult than management depicted by management and 3) there are more attractive alternatives for value creation.
Recently another major investor, Starboard Value, expressed its opposition to the mega-merger—memorialized in an letter to BMS shareholders. Starboard, an American hedge fund founded in 2002 expressed 5 concerns :
- In buying Celgene, BMS essentially buys a massive patent cliff—among the largest in pharma history
- The amount of capital, time and effort required to fulfill the Celgene oncology pipeline will be far greater than management is projecting (essentially management is far to overly optimistic)
- The transaction wasn’t planned out well in advanced but rather was “hastily construed” and perhaps was done to “thwart strategic interest” in BMS
- They have overvalued Celgene
- BMS shareholders are better off either A) as a stand-alone or B) as an acquisition target itself
BMS scheduled a shareholder meeting in April. It could be a raucous affair, should this BMS pharma shareholder revolt gain steam. It should be a reminder for big pharma management that publicly traded companies require delicate, deliberate and comprehensive shareholder education and buy-in initiative.Source: www.businesswire.com