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Bristol Spins Off Mead Johnson in Stock Swap, Finally Pure Biopharma

Bristol has finalized its strategy to focus on biopharmaceuticals by swapping its 83% stake in Mead Johnson Nutritionals for BMS shares. The move will not raise cash but the buyback structure of the deal will improve BMS's cash flow and increase earnings per share ahead of its impending Plavix/Avapro patent cliff.

While some large drugmakers have been hedging their pharmaceutical bets by diversifying into areas like animal health and consumer health, Bristol-Myers Squibb Co. is going all-in on its wager on biopharma. The company announced on November 15 its plans to split off its 83.1% holdings in Mead Johnson Nutrition Co., its last diversified business. [See Deal] The move will provide short-term financial gain for BMS at the expense of losing an element of stability afforded by its arms-length relationship with Mead.

In the stock swap transaction, Bristol investors who choose to tender their shares will receive approximately $1.11 of Mead Johnson...

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