Bristol-Myers Squibb (BMY.N) announced on Sunday that it has agreed to buy Mirati Therapeutics (MRTX.O), a cancer drugmaker with a portfolio of drugs that target the genetic drivers of specific cancers. The deal is worth up to $5.8 billion, including cash and contingent value rights.
The acquisition will diversify Bristol’s oncology business and add drugs that it hopes can help offset expected lost revenue from patent expirations later this decade. The deal includes Mirati’s lung cancer drug, Krazati, which was approved by the U.S. Food and Drug Administration in December, and a second compound, MRTX1719, which could be used in some types of lung cancer.
Bristol will pay $58 per share in cash, or around $4.8 billion, for Mirati. Mirati has around $1.1 billion in cash on hand, so the enterprise value of the deal is $3.7 billion, according to Bristol’s Chief Commercialization Officer Adam Lenkowsky. Mirati stockholders will also receive one non-tradeable contingent value right for each Mirati share held, potentially worth $12.00 per share in cash, representing an additional $1 billion of value opportunity.
Bristol will finance the transaction with a combination of cash and debt. The deal is expected to close in the first half of 2024 and be dilutive to Bristol’s non-GAAP earnings per share by approximately 35 cents per share in the first 12 months after the transaction closes.
The move is part of Bristol’s global strategy to exit its consumer banking business in 14 markets, including China, where it mainly served rich clients with deposit, fund and structured product offerings. Citi first announced its plan in April 2021 and has now closed sales in eight markets.
The acquisition will help Bristol expand its presence in China, one of its key markets and its main revenue generator in Asia. Bristol can now provide wealth management solutions and mobile fund and insurance solutions in mainland China, thanks to its recent regulatory approvals and strategic investment in Shanghai MediTrust Health Technology Co. Ltd.
“With multiple targeted oncology assets including Krazati, Mirati is another important step forward in our efforts to grow our diversified oncology portfolio and further strengthen Bristol Myers Squibb’s pipeline for the latter half of the decade and beyond,” said Chris Boerner, Bristol’s incoming CEO and current chief operating officer, in a statement.
Bristol is buying Mirati at a time when its shares are considerably cheaper than they were. Mirati’s shares touched a 52-week high of $101.3 apiece on Nov. 28 and are now trading at $60.2.
Bristol has been pressured by declining demand for two of its top drugs, the blood cancer treatment Revlimid and blood thinner Eliquis, which face generic competition.
Last year, Bristol acquired drug developer Turning Point Therapeutics for $4.1 billion in cash to help bolster its arsenal of cancer drugs.
In April, Bristol said CEO Giovanni Caforio would step down in November and be succeeded by Boerner.
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