Bristol-Myers Cleans Up on Mead Johnson (BMY, MJN)

Bristol-Myers Squibb Company (NYSE: BMY) is going to completely separate itself from its holdings in Mead Johnson Nutrition Company (NYSE: MJN).  The company expects that the split-off will be a tax-advantaged way to divest these holdings and is expected to be net cash flow positive to the BioPharma business and is expected to be accretive to earnings per share beginning in 2010.  Mead Johnson has had one unbelievable year.  This came public in February and traded as low as $25.72 after the IPO.  Shares closed at $45.25 on Friday.

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 in what should be a tax-free transaction to participating shareholders. Bristol-Myers Squibb will convert all of its Mead Johnson class B common stock into Mead Johnson class A common stock and only Mead Johnson class A common stock will remain outstanding after the conversion.

The price of Mead Johnson common stock is to be established by a formula subject to an upper limit of 0.6027 shares of Mead Johnson per share of Bristol-Myers Squibb. For each $1.00 of Bristol-Myers Squibb common stock accepted in the exchange offer, the tendering shareholder will receive about $1.11 of Mead Johnson common stock, subject to the upper limit on the exchange ratio.

The ratio of Bristol-Myers Squibb and Mead Johnson shares will be determined by a 10% discount to the simple arithmetic average of the daily volume-weighted average prices of shares of Bristol-Myers Squibb common stock and Mead Johnson common shares traded on the NYSE over a three-day period currently expected to be December 8, 9, and 10, 2009.  The largest possible number of shares of Bristol-Myers Squibb common stock that will be accepted will be equal to 170,000,000 divided by the final exchange ratio.

Bristol-Myers Squibb owns 170,000,000 shares of Mead Johnson class A and class B common stock, which comes to about 97.5% of the voting interest and 83.1% of the economic interest in Mead Johnson.

Mead Johnson shares are down 4.5% at $43.18 and Bristol-Myers Squibb shares are up 3.5% at $23.00 in pre-market trading.

JON C. OGG
November 16, 2009