Five Wall Street Banks Rake Record Amount of Advisory Fees from the Bristol-Myers Squibb’s $74 Billion Takeover of Celgene

Five American banks will collectively derive massive fees of $300 million for advising US based pharmaceutical Celgene’s acquisition by Bristol-Myers Squibb’s for $74 billion. The acquisition will mark largest ever takeover bid in the pharmaceutical sector after the Warner-Lambert acquisition by Pfizer for $110 billion shook the pharmaceutical sector in 1999.

The deal would bring two of the biggest cancer drug manufacturers in the world together. The filings with the US regulator Securities and Exchange Commission on 1st Feb revealed the $304 million advisory fees for five banks, which is a record amount after six banks made $260 million in advisory fees from the Japanese drug maker Takeda’s takeover of UK-based Shire.

Morgan Stanley, the principal financer of the deal will make $100 million for providing a bridge loan worth $33.5 billion which is one of the biggest loans ever provided to a private corporation in history. Morgan Stanley will also gather $82 million in advisory fees from Bristol-Myers Squibb and it will get $67 million of the entire amount only when the deal closes in the Q3 2019.

The loan has been made available by a joint venture of Morgan Stanley and a Japanese bank MUFG. The partnership started at the peak of 2008 financial crisis when MUFG bought a 21% stake in Morgan Stanley for $9 billion. The duo, just last year, lent $27 billion loan to US health insurer Cigna to buy the pharmacy benefit manager Express Scripts for $52 billion. Evercore will make $30 million in advisory fees while Dyal Co, a boutique set up by Gordon Dyal will make $25 million for advising BMS.

JPMorgan will receive $100 million, the largest fee among all banks for advising Celgene, $15 million of it will be paid after the closure of the deal. The co-advisor to Celgene Citigroup will earn $67 million in total and $10 million of the fees will be paid later.

The value of mergers and acquisition surpassed $4 trillion last year. Data from Refinitiv states that the record deals have happened just three times since 1980. The pharmaceutical sector is reputed for busiest and biggest mergers and acquisitions partly because once the patents on blockbuster drugs expires and new generic alternatives flood the market, the loss of revenues make it difficult to sustain in business.

The Celgene acquisition will give more cancer drugs to Bristol-Myers Squibb when it is struggling with its immuno-oncology portfolio to keep up with competition from rival Merck’s.

Author: Sandali Tiwari

A former journalist, Sandali is a content marketer with over 5 years of writing experience, across various industries including Food Innovation, Healthcare, and IoT and Technology. Sandali has been weaving corporate stories for organizations through different forms of impactful marketing content. Her key aim is to strategically align well-crafted narratives with business objectives, translating into a powerful communications platform for the company.