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Bristol-Myers urges shareholders in open letter to support $74 billion Celgene deal amid resistance

Bristol-Myers Squibb on Wednesday urged investors to support its $74 billion purchase of cancer drugmaker Celgene amid public resistance from top shareholders.

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The company said in an open letter to shareholders, its board of directors are “confident” the drugmakers acquisition of Celgene is the best path forward. The board argued the Celgene transaction will ensure the company’s “strong growth continues for the foreseeable future” and will immediately establish market leadership in oncology.

“We undertook a robust and comprehensive review of our core business and strategic expansion opportunities potentially available to the company and identified the Celgene acquisition as the most attractive opportunity for shareholder value creation,” the company said in a release.

Bristol has sent executives to New York to meet with institutional investors several times over the last several weeks and met with investors in Boston last Wednesday and Thursday to try and salvage the deal, a person briefed on the meetings told CNBC.

Last week, hedge funds Wellington Management and Starboard Value said they do not approve the blockbuster deal.

Wellington — which is Bristol’s largest institutional holder with 135.3 million shares, or 8 percent, of its common stock — said the Celgene deal asks Bristol shareholders to accept too much risk. Starboard, which holds about 1 million shares, cited similar concerns, saying the Celgene deal was “poorly conceived and ill-advised.”

Starboard said Wednesday it mailed a letter to Bristol shareholders, reiterating its belief that the deal is not in shareholders’ best interests.

The deal was hard sell to Bristol shareholders from the start. The acquisition adds about $32 billion in fresh debt to Bristol’s balance sheet while assuming $20 billion in Celgene’s debt, the companies said at the time. After factoring in debt, the acquisition was the largest health-care deal on record, according to data compiled by Refinitiv.

Buying Celgene gives Bristol more cancer drugs at a time when its immuno-oncology portfolio struggles to keep up with rival Merck’s

Shareholders will vote on the proposed acquisition next month.

The company on Wednesday reiterated that it expects the transaction to close in the second half of this year.