Icahn buys Bristol-Myers shares, adding to activist pressure

(Reuters) - Billionaire investor Carl Icahn has taken a stake in Bristol-Myers Squibb Co BMY.N and sees the drugmaker as a possible takeover target, according to a report published on Tuesday that sent the company's shares from a loss to more than 2 percent higher.

Billionaire activist-investor Carl Icahn gives an interview on FOX Business Network's Neil Cavuto show in New York, U.S. on February 11, 2014. REUTERS/Brendan McDermid/File Photo

Earlier on Tuesday, Bristol-Myers said it added three directors to its board, a move supported by JANA Partners LLC, an activist investor building a stake in the company’s stock.

Bristol shares were down nearly 2 percent for much of the day before jumping as high as $57.21 after the Wall Street Journal said Icahn has built a large stake. The report did not identify the size of the stake but said Icahn sees the company as a takeover target, citing anonymous sources.

The shares ultimately gave back most of the gains and closed up 19 cents, or 0.35 percent, at $54.78.

The addition of new board members comes as Bristol-Myers has fallen behind Merck & Co Inc MRK.N in the key field of immuno-oncology after its Opdivo drug failed to prolong survival in previously untreated patients with non-small cell lung cancer, the largest cancer market. Merck's rival drug, Keytruda, did extend survival as a so-called front-line treatment for NSCLC.

Bristol’s weaker competitive position has been reflected in its shares, which are off about 28 percent since the lung cancer setback last August. Merck shares are up more than 11 percent over the same period.

Bristol-Myers also disclosed that it expects to post charges of $1.5 billion to $2 billion in connection with a restructuring announced in October. In addition, it announced a $2 billion accelerated share repurchase program to be funded with debt and cash.

Bristol-Myers said company directors and executives met with JANA representatives to understand their views since the firm became a shareholder in late 2016. The board appointments followed those discussions, the company said.

New York-based JANA owned 3.9 million shares of Bristol-Myers as of Dec. 31, a $226 million stake well below 1 percent of the $92 billion company. According to people familiar with the matter, JANA has substantially increased its stake since January, though it is still below 1 percent of the outstanding shares.

Bristol boosted its board to 14 people with the new directors.

They include Theodore Samuels, who retired this year as a senior vice president and portfolio manager at the Capital Group, one of Bristol-Myers' largest shareholders. Samuels joined the board earlier this year at drugmaker Perrigo Co PRGO.N, which later struck a deal with activist Starboard Value LP two weeks ago to add 3 more directors.

Also joining the board is Robert Bertolini, an accountant and tax expert who as chief financial officer under Chief Executive Fred Hassan helped turn around a struggling Schering-Plough prior to its merger with Merck. He was later president and CFO at eye care company Bausch & Lomb.

Bertolini also sits on the board of Actelion ATLN.S, which is being acquired by Johnson & Johnson JNJ.N

Matthew Emmens, the former chief executive officer of Vertex Pharmaceuticals Inc VRTX.O and before that Shire SHP.L, was also named.

Emmens, known for his experience in bringing new medicines to market, joined Vertex to oversee the highly successful launch of its hepatitis C drug Incivek, although it was soon overtaken by safer and more effective treatments.

Jana on Tuesday also secured an agreement to add three directors to the board of Tiffany & Co TIF.N.

Reporting by Caroline Humer, Bill Berkrot and Michael Flaherty in New York and Ankur Banerjee in Bengaluru; Editing by Bernard Orr and Dan Grebler