Bristol-Myers Rises After Report That Carl Icahn Owns Stake

Updated on
  • DJ report says Icahn sees drugmaker as takeover target
  • Co. earlier named 3 directors after talks with holder Jana

Bristol Myers Squibb Co. shares rose as much as 4.8 percent after Dow Jones reported that activist investor Carl Icahn has taken a stake in the drugmaker and sees it as a possible takeover target.

Icahn owns a large stake, Dow Jones said, citing people familiar with the matter. It isn’t clear how large the holding is, the news agency said.

The shares, which spiked after the report, pared some of the gains and closed up 0.4 percent to $54.78 in New York, valuing the company at about $92 billion.

If it’s confirmed, Icahn’s stake would mark an acceleration in hedge fund activism after Jana Partners LLC took a small stake in Bristol-Myers last quarter. Investors and analysts have been speculating about a possible takeover after Bristol-Myers lost about $30 billion in market value in about eight months following several setbacks in the clinic with its cancer drugs.

A Bristol-Myers spokeswoman declined to comment. Icahn didn’t respond to requests for comment.

New Directors

Earlier Tuesday, the New York-based drugmaker named three new directors and agreed to buy back $2 billion of its own shares after holding discussions with Jana, which took a stake of just 0.2 percent, or $226 million.

Investors don’t seem optimistic about the possibility of a takeout, BMO analyst Alex Arfaei said in a note Tuesday before the Dow Jones report. Arfaei rates the stock market perform.

Bristol, which has increased its focus on cancer drug development, gotten some disappointing results from studies of its key drug Opdivo recently. In August, the drug failed in lung cancer trial that could have widened its use. In January, Bristol-Myers announced that it wouldn’t seek early approval for a drug combination that includes Opdivo as a primary treatment for a type of lung cancer. 

Cancer is one of the hottest areas for Big Pharma and investors with drugs that harness the immune system, commanding high prices and marking major advances in care, in some cases. Rival Merck & Co.’s Keytruda, which competes with Opdivo, has won several approvals, including for first-line lung cancer treatment in the U.S. Meanwhile, since the trial failure in August, Bristol-Myers’s shares have fallen 13 percent.

Icahn rose to fame in the 1980s as a corporate raider has rebranded as an activist investor and outspoken shareholder advocate. Worth about $20 billion, according to the Bloomberg Billionaires Index, Icahn primarily invests his own fortune rather than relying on money from outsiders. The outspoken investor was named an informal adviser to President Donald Trump in December, after publicly endorsing the real estate executive’s candidacy in September 2015.