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November 17, 2009

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Split-off to focus on biopharma business

BRISTOL-MYERS Squibb Co is splitting off its holdings in infant formula maker Mead Johnson Nutrition Co in order to focus on its biopharmaceutical business.

The New York-based drug maker, which owns about 83 percent of Mead stock, expects the deal to add to earnings starting in 2010.

The company says the stock swap is designed to allow Bristol-Myers shareholders to exchange some, all or none of their shares for Mead stock tax-free and at a discount. For each US$1 of Bristol-Myers stock swapped, shareholders will get about US$1.11 worth of Mead shares.

Bristol-Myers in 2008 decided to spin off Mead Johnson to focus on buying biotech drugs and shift its efforts into biopharma. Illinois-based Mead, which makes children's liquid and powder formulas, went public in February, raising US$680 million after expenses.

"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," said Bristol-Myers Chairman and CEO James M. Cornelius late Sunday. "With a successful execution of this split-off, we fully consider ourselves a biopharma company."

Bristol-Myers owns 170 million shares of Mead Johnson Class A and Class B common stock. Based on the US$45.25 closing price of Mead shares last Friday, the value of the shares being split off would total US$7.69 billion.


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