Question

BMY and CELG Acquization

1. Changes or shocks in macroeconomic (e.g., interest rates), industry (e.g., oil price, consumer preferences) or global factors (e.g., tariffs and trade agreements) often leads to opportunities to create value through mergers and acquisitions. Articulate and analyze each of the main specific changes/shocks in factors that you believe are leading to the merger between BMY and CELG.

2. How will the merger help the acquirer address the impact of the above changes/shocks in factors you listed?

Answer 1

Bristol-Myers Squibb, Merger Sub and Celgene have entered into the merger agreement. Subject to the terms and conditions of the merger agreement and in accordance with applicable law, in the merger, Merger Sub will be merged with and into Celgene, with Celgene continuing as the surviving corporation and a wholly-owned subsidiary of Bristol-Myers Squibb. Upon completion of the merger, shares of Celgene common stock will no longer be publicly traded, will be delisted from Nasdaq and deregistered under the Exchange Act.

Meeting. The Bristol-Myers Squibb special meeting will be held on April 12, 2019, at the offices of Kirkland & Ellis LLP located at 601 Lexington Avenue, New York, New York 10022, at 10:00 a.m., Eastern Time. At the Bristol-Myers Squibb special meeting, Bristol-Myers Squibb stockholders will be asked to consider and vote on the following proposals:

•   to approve the stock issuance; and
•   to approve the Bristol-Myers Squibb adjournment proposal.
Record Date. The BMS Board has fixed the close of business on March 1, 2019, as the record date for the determination of the stockholders entitled to notice of and to vote at the Bristol-Myers Squibb special meeting or any adjournment or postponement of the Bristol-Myers Squibb special meeting. Only Bristol-Myers Squibb stockholders of record at the record date are entitled to receive notice of, and to vote at, the Bristol-Myers Squibb special meeting or any adjournment or postponement of the Bristol-Myers Squibb special meeting. As of the close of business on January 24, 2019, there were (i) 1,632,650,807.509 shares of Bristol-Myers Squibb, $0.10 par value per share, common stock outstanding and entitled to vote at the Bristol-Myers Squibb special meeting, held by approximately 39,427 holders of record, and (ii) 3,586 shares of Bristol-Myers Squibb $2.00 convertible preferred stock outstanding and entitled to vote at the Bristol-Myers Squibb special meeting, held by approximately 141 holders of record.

Quorum. The presence at the Bristol-Myers Squibb special meeting, in person or by proxy, of the holders of a majority of the outstanding shares of Bristol-Myers Squibb stock at the record date (the close of business on March 1, 2019) entitled to vote will constitute a quorum. Elections to abstain from voting will be deemed present at the Bristol-Myers Squibb special meeting for the purpose of determining the presence of a quorum. Shares of Bristol-Myers Squibb stock held in “street name” with respect to which the beneficial owner fails to give voting instructions to the broker, bank or other nominee holder of record, and shares of Bristol-Myers Squibb stock with respect to which the beneficial owner otherwise fails to vote, will not be deemed present at the Bristol-Myers Squibb special meeting for the purpose of determining the presence of a quorum. There must be a quorum for the vote on the stock issuance to be taken at the Bristol-Myers Squibb special meeting. Failure of a quorum to be present at the Bristol-Myers Squibb special meeting will necessitate an adjournment of the meeting and will subject Bristol-Myers Squibb to additional expense.

Required Vote. The affirmative vote of at least a majority of the votes cast by holders of outstanding shares of Bristol-Myers Squibb stock at a duly called and held meeting of Bristol-Myers Squibb’s stockholders at which a quorum is present is required to approve the issuance of shares of Bristol-Myers Squibb stock in connection with the merger. Bristol-Myers Squibb cannot complete the merger unless its stockholders approve the stock issuance. Under the current rules and interpretive guidance of the NYSE, “votes cast” on the stock issuance consist of votes “for” or “against,” as well as elections to abstain from voting on the stock issuance. As a result,

a Bristol-Myers Squibb stockholder’s abstention from voting on the stock issuance will have the same effect as a vote “AGAINST” the proposal. Assuming a quorum is present, the failure of a Bristol-Myers Squibb stockholder who holds his or her shares in “street name” through a broker, bank or other nominee holder of record to give voting instructions to that broker, bank or other nominee holder of record or any other failure of a Bristol-Myers Squibb stockholder to vote will have no effect on the outcome of any vote to approve the stock issuance because these failures to vote are not considered “votes cast.”

Approval of the Bristol-Myers Squibb adjournment proposal, whether or not a quorum, as defined under Delaware law, is present, requires the affirmative vote of a majority of the votes present at the Bristol-Myers Squibb special meeting by Bristol-Myers Squibb stockholders entitled to vote. For purposes of the Bristol-Myers Squibb adjournment proposal, “votes present” on the proposal consist of votes “for” or “against” as well as elections to abstain from voting on the proposal. As a result, a Bristol-Myers Squibb stockholder’s abstention from voting on the Bristol-Myers Squibb adjournment proposal will have the same effect as a vote “AGAINST” the approval of the proposal. The failure of a Bristol-Myers Squibb stockholder who holds his or her shares in “street name” through a broker, bank or other nominee holder of record to give voting instructions to that broker, bank or other nominee holder of record or any other failure of a Bristol-Myers Squibb stockholder to vote will have no effect on the approval of this proposal because these failures to vote are not considered “votes present.”

Stock Ownership of and Voting by Bristol-Myers Squibb Directors and Executive Officers (see page 221). As of January 24, 2019, Bristol-Myers Squibb’s directors and executive officers and their affiliates beneficially owned and had the right to vote in the aggregate 1,810,875 shares of Bristol-Myers Squibb stock at the Bristol-Myers Squibb special meeting, which represents approximately less than 1% of the shares of Bristol-Myers Squibb stock entitled to vote at the Bristol-Myers Squibb special meeting. Approval of the stock issuance requires the affirmative vote of at least a majority of the votes cast by holders of outstanding shares of Bristol-Myers Squibb stock at a duly called and held meeting of Bristol-Myers Squibb’s stockholders at which a quorum is present.

Each of Bristol-Myers Squibb’s directors and executive officers is expected, as of the date of this joint proxy statement/prospectus, to vote his or her shares of Bristol-Myers Squibb stock “FOR” the stock issuance and “FOR” the Bristol-Myers Squibb adjournment proposal, although none of Bristol-Myers Squibb’s directors and executive officers has entered into any agreement requiring them to do so.

Stock Ownership of and Voting by Celgene Directors and Executive Officers (see page 89). As of the close of business on January 29, 2019), Celgene’s directors and executive officers and their affiliates beneficially owned and had the right to vote in the aggregate 595,296 shares of Celgene common stock at the Celgene special meeting, which represents approximately less than 1% of the shares of Celgene common stock entitled to vote at the Celgene special meeting.

Each of Celgene’s directors and executive officers is expected, as of the date of this joint proxy statement/prospectus, to vote his or her shares of Celgene common stock “FOR” the proposal to adopt the merger agreement, “FOR” the Celgene adjournment proposal and “FOR” the Celgene compensation advisory proposal, although none of Celgene’s directors or executive officers has entered into any agreement requiring them to do so.

If the merger is completed, Celgene stockholders, other than holders of excluded stock and dissenting stock, will be entitled to receive, in exchange for each share of Celgene common stock that they own immediately prior to the completion of the merger, $50.00 in cash without interest thereon, one share of Bristol-Myers Squibb common stock and one CVR.

The exchange ratio is fixed, which means that it will not change between now and the date of the merger, regardless of whether the market price of either shares of Bristol-Myers Squibb common stock or shares of Celgene common stock changes. Therefore, the value of the share consideration will depend on the market price of shares of Bristol-Myers Squibb common stock at the time Celgene stockholders receive shares of Bristol-Myers Squibb common stock in the merger. Based on the closing price of a share of Bristol-Myers Squibb common stock on the NYSE on January 2, 2019, the last trading day prior to announcement of the transaction between Bristol-Myers Squibb and Celgene, the upfront merger consideration represented approximately $102.43 in value for each share of Celgene common stock (without considering any potential CVR payout). Based on the closing price of a share of Bristol-Myers Squibb common stock on the NYSE on January 31, 2019, the most recent trading day prior to the date of this joint proxy statement/prospectus for which this information was available, the upfront merger consideration represented approximately $99.37 in value for each share of Celgene common stock (without considering any potential CVR payout). The market price of shares of Bristol-Myers Squibb common stock has fluctuated since the date of the announcement of the merger agreement and will continue to fluctuate from the date of this joint proxy statement/prospectus to the date of the Celgene special meeting and the date the merger is completed and thereafter. The market price of shares of Bristol-Myers Squibb common stock when received by Celgene stockholders after the merger is completed could be greater than, less than or the same as the market price of shares of Bristol-Myers Squibb common stock on the date of this joint proxy statement/prospectus or at the time of the Celgene special meeting or any adjournment or postponement thereof.

At the effective time of the merger, each Celgene Stock Option, whether or not vested will be treated as described below.

If such Celgene Stock Option is an In-the-Money Option it will be assumed by Bristol-Myers Squibb and converted into (a) an Assumed In-the-Money Option to purchase, on the same terms and conditions as applied to each such Celgene Stock Option immediately prior to the effective time of the merger, shares of Bristol-Myers Squibb common stock, except that the number of shares of Bristol-Myers Squibb common stock, subject to such Assumed In-the-Money Options shall equal the product of (i) the number of shares of Celgene common stock that were subject to such Celgene Stock Option immediately prior to the completion of the merger, multiplied by (ii) the Equity Award Exchange Ratio (rounded down to the nearest number of whole shares of Bristol-Myers Squibb common stock) and the per-share exercise price will equal the quotient of (x) the exercise price per share of Celgene common stock at which such Celgene Stock Option was exercisable, divided by (y) the Equity Award Exchange Ratio (rounded up to the nearest whole cent), and (b) the right to receive (i) if such In-the-Money Option was vested prior to the effective time of the merger, one CVR for each share of Celgene common stock underlying such In-the-Money Option or (ii) if such In-the-Money Option was not vested immediately prior to the completion of the merger, immediately upon, and subject to, the vesting of the Assumed In-the Money Option, the Unvested Equity Award CVR Consideration. Each Assumed In-the-Money Option will continue to have the same terms and conditions as applied to the corresponding Celgene Stock Option immediately prior to the effective time of the merger.

If such Celgene Stock Option is an Out-of-the-Money Option, it will be assumed by Bristol-Myers Squibb and converted into an Assumed Out-of-the-Money Stock Option to purchase, on the same terms and conditions as applied to each such Celgene Stock Option immediately prior to the effective time of the merger, shares of Bristol-Myers Squibb common stock, except that the number of shares of Bristol-Myers Squibb common stock, subject to such Assumed Out-of-the-Money Stock Option will equal the product of (i) the number of shares of Celgene common stock that were subject to such Celgene Stock Option immediately prior to the effective time of the merger, multiplied by (ii) the Out-of-the-Money Option Exchange Ratio (rounded down to the nearest number of whole shares of Bristol-Myers Squibb common stock), and the per-share exercise price will equal the quotient of (A) the exercise price per share of Celgene common stock at which such Celgene Stock Option was exercisable, divided by (B) the Out-of-the-Money Option Exchange Ratio (rounded up to the nearest whole cent). Each Assumed Out-of-the-Money Stock Option will continue to have the same terms and conditions as applied to the corresponding Celgene Stock Option immediately prior to the effective time of the merger.

At the effective time of the merger, each Celgene RSU Award will be assumed by Bristol-Myers Squibb and converted into (i) an Assumed Restricted Unit Award that settles in a number of shares of Bristol-Myers Squibb common stock equal to the number of shares of Celgene common stock underlying the Celgene RSU Award immediately prior to the effective time of the merger multiplied by the Equity Award Exchange Ratio (rounded up to the nearest whole number of shares) and (ii) the right to receive, subject to the vesting of the Assumed

Restricted Unit Award, the Unvested Equity Award CVR Consideration. Each Assumed Restricted Unit Award will continue to have the same terms and conditions as applied to the corresponding Celgene RSU Award immediately prior to the effective time of the merger.

At the effective time of the merger, each Celgene PSU Award will be assumed by Bristol-Myers Squibb and converted into (i) an Assumed Performance Unit Award that settles in a number of shares of Bristol-Myers Squibb common stock equal to the product of the number of shares of Celgene common stock underlying the Celgene PSU Award immediately prior to the effective time of the merger (determined by deeming the applicable performance goals to be achieved at the greater of the target level and the actual level of achievement through the end of the calendar quarter immediately preceding the merger effective time) multiplied by the Equity Award Exchange Ratio (rounded up to the nearest whole number of shares), and (ii) the right to receive, subject to the vesting of the Assumed Performance Unit Award, the Unvested Equity Award CVR Consideration. Each Assumed Performance Unit Award will continue to have the same terms and conditions as applied to the corresponding Celgene PSU Award (other than performance-based vesting conditions) immediately prior to the effective time of the merger.

At the effective time of the merger, each Celgene RSA will be assumed by Bristol-Myers Squibb and converted into (i) an Assumed Restricted Stock Award that settles in a number of shares of Bristol-Myers Squibb common stock equal to the number of shares of Celgene common stock underlying the Celgene RSA immediately prior to the effective time of the merger multiplied by the Equity Award Exchange Ratio (rounded up to the nearest whole number of shares), and (ii) the right to receive, subject to the vesting of the Assumed Restricted Stock Award, the Unvested Equity Award CVR Consideration. Each Assumed Restricted Stock Award will continue to have the same terms and conditions as applied to the corresponding Celgene RSA immediately prior to the effective time of the merger.

As more fully described in this joint proxy statement/prospectus and in the merger agreement, the obligation of each of Bristol-Myers Squibb and Merger Sub, on the one hand, and Celgene, on the other hand, to complete the merger is subject to the satisfaction (or, to the extent permitted by applicable law, waiver) of a number of conditions.

Mutual Conditions to Completion. The obligation of each of Celgene, Bristol-Myers Squibb and Merger Sub to complete the merger is subject to the satisfaction (or, to the extent permitted by applicable law, waiver) of the following conditions:

•   adoption of the merger agreement by the affirmative vote of the holders of at least a majority of the outstanding shares of Celgene common stock;
•   affirmative vote of at least a majority of the votes cast by holders of outstanding shares of Bristol-Myers Squibb stock at a duly called and held meeting of Bristol-Myers Squibb’s stockholders at which a quorum is present approving the stock issuance;
•   the absence of any injunction or order issued by any court or other governmental authority of competent jurisdiction that enjoins, prevents or prohibits completion of the merger;
•   effectiveness of the registration statement for the Bristol-Myers Squibb common stock and CVRs to be issued in the merger (of which this joint proxy statement/prospectus forms a part) and the absence of any stop order suspending that effectiveness or any proceedings for that purpose pending before the SEC;
•   approval for listing on the NYSE of both the Bristol-Myers Squibb common stock and the CVRs to be issued in the merger, subject to official notice of issuance; and
•   any applicable waiting period under the HSR Act shall have expired or been terminated and the receipt of approvals under the antitrust laws of certain specified foreign jurisdictions shall have been obtained.
Additional Conditions to Completion for the Benefit of Bristol-Myers Squibb and Merger Sub. In addition, the obligation of Bristol-Myers Squibb and Merger Sub to complete the merger is subject to the satisfaction (or, to the extent permitted by applicable law, waiver) of the following conditions:

•   performance in all material respects by Celgene of the covenants and agreements required to be performed by it at or prior to completion of the merger;

the accuracy of the representations and warranties of Celgene in the merger agreement as of the date of the merger agreement and as of the completion of the merger (or, in the case of the representations and warranties given as of another specified date, as of that date), subject to the applicable materiality standards set forth in the merger agreement and more fully described in “The Merger Agreement—Conditions to Completion of the Merger” beginning on page 176 of this joint proxy statement/prospectus; and
•   receipt of a certificate from an executive officer of Celgene confirming the satisfaction of the conditions described in the preceding two bullets.
Additional Conditions to Completion for the Benefit of Celgene. In addition, the obligation of Celgene to complete the merger is subject to the satisfaction (or, to the extent permitted by applicable law, waiver) of the following conditions:

•   performance in all material respects by each of Bristol-Myers Squibb and Merger Sub of the covenants and agreements required to be performed by it at or prior to completion of the merger;
•   the accuracy of the representations and warranties of Bristol-Myers Squibb and Merger Sub in the merger agreement as of the date of the merger agreement and as of the completion of the merger (or, in the case of the representations and warranties given as of another specified date, as of that date), subject to the applicable materiality standards set forth in the merger agreement and more fully described in “The Merger Agreement— Conditions to Completion of the Merger” beginning on page 176 of this joint proxy statement/prospectus; and
•   receipt of a certificate from an executive officer of Bristol-Myers Squibb confirming the satisfaction of the conditions described in the preceding two bullets.
Neither Bristol-Myers Squibb nor Celgene can be certain when, or if, the conditions to the merger will be satisfied or waived, or that the merger will be completed.

Completion of the merger is conditioned upon the expiration or early termination of the waiting period relating to the merger under the HSR Act and the receipt of approvals under the antitrust laws of certain specified foreign jurisdictions.

Under the HSR Act, certain transactions, including the merger, may not be completed unless certain waiting period requirements have expired or been terminated. The HSR Act provides that each party must file a pre-merger notification with the Federal Trade Commission, which is referred to in this joint proxy statement/prospectus as the FTC, and the Antitrust Division of the U.S. Department of Justice, which is referred to in this joint proxy statement/prospectus as the DOJ. A transaction notifiable under the HSR Act may not be completed until the expiration of a 30-calendar-day waiting period following the parties’ filings of their respective HSR Act notification forms or the early termination of that waiting period. The parties may also choose to voluntarily re-start the initial 30-day waiting period by following certain prescribed procedures. After the expiration of the initial waiting period (or the re-started initial waiting period), the DOJ or the FTC may issue a Request for Additional Information and Documentary Material, which is referred to in this joint proxy statement/prospectus as a Second Request. If a Second Request is issued, the parties may not complete the merger until they substantially comply with the Second Request and observe a second 30-calendar-day waiting period, unless the waiting period is terminated earlier.

Each of Bristol-Myers Squibb and Celgene filed its respective HSR Act notification and report with respect to the merger on January 16, 2019.

In addition, the European Commission and certain other non-U.S. governmental authorities must approve, or be notified of, the merger, and Bristol-Myers Squibb and/or Celgene and/or their respective subsidiaries will file all such statements, notices or applications, as are required by the laws of applicable non-U.S. governmental authorities.

Neither Bristol-Myers Squibb nor Celgene is aware of any material governmental approvals or actions that are required for completion of the merger other than those described above. It is presently contemplated that if any such additional material governmental approvals or actions are required, those approvals or actions will be sought.

Bristol-Myers Squibb and Celgene have agreed to use their respective reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable to consummate the merger, including (i) preparing and filing as promptly as practicable all necessary regulatory filings, (ii) supplying information that may be requested by regulatory authorities pursuant to applicable laws, and (iii) cooperating with the other parties, to the extent reasonable, in their efforts to comply with their obligations under the merger agreement. Bristol-Myers Squibb and Celgene are also required to use their reasonable best efforts to contest any governmental action challenging the legality of the merger or any order prohibiting the parties from completing the merger.

Bristol-Myers Squibb’s obligation to use reasonable best efforts (as described in the preceding paragraph) also includes taking and agreeing to take all actions and doing or agreeing to do all things necessary, proper or advisable under the relevant law (including divestitures, hold separate arrangements, the termination, assignment, novation or modification of contracts or other business relationships, the acceptance of restrictions on business operations and the entry into other commitments and limitations). However, Bristol-Myers Squibb is not required to take any action or agree to any term or condition if doing so would have or would reasonably be expected to have, individually or in the aggregate, a material adverse effect on the financial condition, business or results of operations of Bristol-Myers Squibb, Celgene and their respective subsidiaries, taken as a whole, after giving effect to the completion of the merger. In addition, in connection with obtaining the regulatory approvals required to complete the merger, (i) neither Bristol-Myers Squibb nor Celgene is required to take any action or agree to any term or condition that is not conditioned upon completion of the merger and (ii) Celgene is not permitted to take any action or agree to any term or condition without Bristol-Myers Squibb’s consent, but if requested by Bristol-Myers Squibb, Celgene is required to take any such action to obtain regulatory approvals required to complete the merger subject to the immediately preceding clause

Upon completion of the merger, each share of Celgene common stock outstanding immediately prior to the completion of the merger (other than excluded stock and dissenting stock) will be converted into the right to receive $50.00 in cash without interest thereon, one share of Bristol-Myers Squibb common stock and one CVR. Because the exchange ratio of one share of Bristol-Myers Squibb common stock is fixed, the value of the share consideration will depend on the market price of shares of Bristol-Myers Squibb common stock at the time the merger is completed. The market price of shares of Bristol-Myers Squibb common stock has fluctuated since the date of the announcement of the merger agreement and will continue to fluctuate from the date of this joint proxy statement/prospectus to the date of the Celgene special meeting and the date the merger is completed, which could occur a considerable amount of time after the date of the Celgene special meeting, and thereafter. There is also uncertainty regarding the fair market value of the CVRs and whether any payment will ultimately be realized on the CVRs. Accordingly, at the time of the Celgene special meeting, Celgene stockholders will not know or be able to determine the market value of the merger consideration they would be entitled to receive upon completion of the merger. Stock price changes may result from a variety of factors, including, among others, general market and economic conditions, changes in Bristol-Myers Squibb’s and Celgene’s respective businesses, operations and prospects, risks inherent in their respective businesses, changes in market assessments of the likelihood that the merger will be completed and/or the value that may be generated by the merger, and changes with respect to expectations regarding the timing of the merger and regulatory considerations. Many of these factors are beyond Bristol-Myers Squibb’s and Celgene’s control. Bristol-Myers Squibb stockholders and Celgene stockholders are urged to obtain current market quotations for shares of Bristol-Myers Squibb common stock in deciding whether to vote for the stock issuance or the adoption of the merger agreement, as applicable.

Bristol-Myers Squibb’s success after the transaction will depend in part on the ability of Bristol-Myers Squibb to retain key executives and other employees of Celgene. Uncertainty about the effect of the merger on Bristol-Myers Squibb and Celgene employees may have an adverse effect on each of Bristol-Myers Squibb and Celgene separately and consequently the combined business. This uncertainty may impair Bristol-Myers Squibb’s and/or Celgene’s ability to attract, retain and motivate key personnel. Employee retention may be particularly challenging during the pendency of the merger, as employees of Bristol-Myers Squibb and Celgene may experience uncertainty about their future roles in the combined business.

Additionally, Celgene’s officers and employees may hold shares of Celgene common stock, and, if the merger is completed, these officers and employees may be entitled to the merger consideration in respect of such shares of Celgene common stock. Officers and employees may hold Celgene Stock Options, Celgene RSUs and Celgene PSUs that are subject to accelerated vesting upon a termination without cause and, in some cases, a resignation for “good reason” on or following, completion of the merger. Pursuant to severance plans maintained by Celgene, certain key employees of Celgene are also entitled to receive severance payments upon a termination without cause and/or a resignation for “good reason” on or following completion of the merger. Under these plans, certain key employees of Celgene potentially could resign from his or her employment following specified circumstances set forth in the applicable plan, including an adverse change in his or her title, authority or responsibilities, compensation and benefits or primary office location that would result in the payments under the arrangements. These payments, individually or in the aggregate, could make retention of Celgene officers and employees more difficult.

Furthermore, if key employees of Bristol-Myers Squibb or Celgene depart or are at risk of departing, including because of issues relating to the uncertainty and difficulty of integration, financial security or a desire not to become employees of the combined business, Bristol-Myers Squibb may have to incur significant costs in retaining such individuals or in identifying, hiring and retaining replacements for departing employees and may lose significant expertise and talent, and the combined company’s ability to realize the anticipated benefits of the merger may be materially and adversely affected. No assurance can be given that the combined company will be able to attract or retain key employees to the same extent that Celgene has been able to attract or retain employees in the past.