There’s nothing like spending $74 billion on an acquisition to get shareholders’ attention. That’s what Bristol-Myers Squibb Co. (NYSE: BMY) found out Thursday morning following the announcement of a definitive agreement to acquire Celgene Corp. (NASDAQ: CELG) for that amount in cash and stock.

Celgene shareholders will receive one Bristol-Myers share and $50.00 in cash for each share of Celgene. The cash-and-stock value of the deal is $102.43 per share and represents a premium of about 54% to Celgene’s Wednesday closing price of $66.64.

Celgene shareholders also will receive one tradeable Contingent Value Right (CVR) for each share of Celgene, entitling the holder to receive a one-time potential payment of $9.00 in cash upon FDA approval of all three of ozanimod (by December 31, 2020), liso-cel (JCAR017) (by December 31, 2020) and bb2121 (by March 31, 2021), in each case for a specified indication.

Did Bristol-Myers really have to pay this much for a company that saw its stock price drop by almost 40% in 2018? Celgene’s market cap is still $46 billion or so, but the 52-week trading range of $58.59 to $109.98 should show how volatile 2018 was. In December alone, Celgene shares slid from $75 to just under $60, before a recovery right around Christmas.

Celgene’s earnings per share (EPS) of $7.44 in 2017 were forecast to rise to $8.79 for 2018 and then north of $10 or so per share in 2019. Revenue growth projected at 17% for 2018 was most recently expected to slow to 11% in 2019. Still, Celgene was valued at a mere eight times the 2018 earnings estimate and less than seven times projected 2019 earnings.

Wall Street still had a consensus price target of $104.66, but it hardly seemed logical to expect gains of around 60% in 2019.

Giovanni Caforio, M.D., board chair and chief executive officer of Bristol-Myers, said:

Together with Celgene, we are creating an innovative biopharma leader, with leading franchises and a deep and broad pipeline that will drive sustainable growth and deliver new options for patients across a range of serious diseases. As a combined entity, we will enhance our leadership positions across our portfolio, including in cancer and immunology and inflammation. We will also benefit from an expanded early- and late-stage pipeline that includes six expected near-term product launches. Together, our pipeline holds significant promise for patients, allowing us to accelerate new options through a broader range of cutting-edge technologies and discovery platforms.

In a separate announcement, Bristol-Myers guided 2019 GAAP EPS in a range of $3.75 to $3.85 and non-GAAP EPS in a range at $4.10 to $4.20. Key 2019 GAAP and non-GAAP guidance assumptions include the combined dilution of $0.09 from the UPSA divestiture and U.S. Pension liabilities transactions. Guidance for 2019 excludes any impact from the Celgene acquisition.

To salve wounded investors, Bristol-Myers expects to accelerate a $5 billion stock buyback program once the deal closes, now anticipated in the third quarter of 2019. The company raised its dividend by a penny a quarter this year to $0.41 per share, and the annual dividend yield at last night’s closing price was 3.25%.

The 54% jump to the share price is a real hit with Celgene shareholders. Celgene stock traded up more than 33% in Thursday’s premarket at $88.88.

Bristol-Myers stock traded down about 15.4% at $44.36, below the 52-week range of $46.94 to $70.05. The consensus price target on the stock was $59.44 before this morning’s announcement.

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