Bristol-Myers Squibb has announced that it will split off its holdings in Mead Johnson Nutrition. The company expects the split-off to be a tax-advantaged way to further deliver value to Bristol-Myers Squibb shareholders. The split-off is expected to be net cash flow positive to the BioPharma business and accretive to earnings per share beginning in 2010.
James Cornelius, chairman and chief executive officer of Bristol-Myers Squibb, said: “This marks the latest step in our company’s transformation into a BioPharma leader. By executing our healthcare divestment strategy, we have sharpened our BioPharma focus, improved the overall financial strength of the company and supported our ability to pursue strategic business development opportunities. All of these actions help us fulfill our mission to discover, develop and deliver innovative medicines to help patients prevail over serious diseases.
“Now is the right time to move forward with a split-off given the excellent performance of Mead Johnson since the IPO earlier this year and our confidence in the current and future performance of our biopharmaceuticals business. With a successful execution of this split-off, we fully consider ourselves a BioPharma company.”
In the exchange offer, Bristol-Myers Squibb shareholders can exchange some, none or all of their shares of Bristol-Myers Squibb common stock for shares of Mead Johnson common stock. The exchange is generally expected to be tax-free to participating shareholders. As part of the exchange offer, Bristol-Myers Squibb will convert all of its Mead Johnson class B common stock into Mead Johnson class A common stock. Upon the completion of the exchange offer, only Mead Johnson class A common stock will remain.
The exchange offer is designed to permit Bristol-Myers Squibb shareholders to exchange shares of Bristol-Myers Squibb common stock for shares of Mead Johnson common stock at a discount.
Bristol-Myers Squibb is limited under US securities laws while the exchange offer is pending and as a result, the company has elected to postpone its investment community meeting originally planned for December 2, 2009 until 2010.
Bristol-Myers Squibb owns 170,000,000 shares of Mead Johnson class A and class B common stock, representing approximately 97.5% of the voting interest and 83.1% of the economic interest in Mead Johnson.
Citigroup Global Markets, Goldman, Sachs & Co. and Morgan Stanley & Co. will serve as the dealer managers for the exchange offer.