Is Celgene and Bristol-Myers a Match Made in Heaven or Doomed to Fail?

This week, major investors are pushing back against what could be the largest healthcare merger in years. ------------------------------------------------------------------------------------------------------------------------------------------------------ [View this email in your browser]( This week, major investors are pushing back against what could be the largest healthcare merger in years. Also, the IEA reports that oil demand continues to rise despite the rise of electric cars, and we're offering up some reasons to question whether investing in Lyft's IPO is a smart idea. – Nick Sciple, Stock Up Guest Editor Is Celgene and Bristol-Myers a Match Made in Heaven or Doomed to Fail? --------------------------------------------------------------- Bristol-Myers Squibb ([NYSE:BMY]( shocked everybody when it announced its $74 billion acquisition of Celgene ([NASDAQ:CELG]( earlier this year. Although management touts the deal for uniting the companies' complementary portfolios of drugs in development, not everyone is happy with the offer, particularly several prominent institutional investors. If the deal closes, Celgene shareholders will pocket $50 per share and one share of Bristol-Myers Squibb stock. In addition, they'll also receive a contingent value right (CVR) providing a one-time, $9-per-share bonus if three of Celgene's most promising drugs in development — ozanimod, a multiple sclerosis therapy, and two cancer therapies known as liso-cel and bb2121 — secure FDA approval by specified dates. However, major Bristol-Myers shareholders, investment managers like Wellington, Dodge & Cox, and Starboard Value, oppose the merger, complaining that the proposed deal does not adequately compensate BMY shareholders. Together, these institutions own around 10% of Bristol-Myers shares. Although that won't be enough to block the merger on their own, the transaction could be in jeopardy if the institutions can convince other shareholders to oppose the deal. They'll have until April 12, when Bristol-Myers shareholders are expected to vote on the proposed merger, to bring a majority of shareholders over to their side. [Click here]( to learn more about the proposed merger and the debate surrounding it. --------------------------------------------------------------- Already subscribed to a premium service? [Click here]( to view your subscriptions. Not a member yet? [Click here]( to sign up! --------------------------------------------------------------- Watch: How Netflix Actually Makes Money? --------------------------------------------------------------- [Watch: How Netflix Actually Makes Money]( Netflix dominates streaming content and accounted for 10% of overall screen time in the United States in 2017 — over 100 hours of television per day. How does Netflix turn all that viewing time into cold hard cash? In this video, we break down Netflix's strategy for converting your attention into profit. --------------------------------------------------------------- Easily track your favorite stocks with our new browser extension for Google Chrome. [Add it to Chrome by going here]( then open a new tab and use the "Manage Tickers" button to customize the page with your favorite stocks. --------------------------------------------------------------- Oil Demand Growth Shows No Signs of Peaking Despite the rise of electric cars, worldwide oil demand has been steadily climbing for years. According to data from the International Energy Agency (IEA), demand recently topped 100 million barrels per day (BPD) for the first time in history. Looking further ahead, "the IEA continues to see no peak in oil demand, as petrochemicals and jet fuel remain the key drivers of growth, particularly in the United States and Asia, more than offsetting a slowdown in gasoline due to efficiency gains and electric cars." This outlook is great news for oil producers, since rising demand should help boost oil prices as long as producers don't pump too much oil. In most cases, oil producers are spending well below the cash flows they can haul in at $50 a barrel so that they can produce a gusher of profits over the next few years. These oil stocks are well positioned for what lies ahead - Devon Energy ([NYSE: DVN]( is one of several companies that have repositioned their businesses to prosper at lower oil prices. The company has sold off several higher-cost assets so that it could focus its four best oil regions. As a result, the company can now generate enough cash at $46 oil to grow its production at a 12% to 17% compound annual growth rate over the next three years as well as pay its dividend. Meanwhile, Devon can produce an increasingly prodigious gusher of free cash at oil prices above that level. For example, if oil averages $55 a barrel over the next three years, which is slightly below its current price point, Devon can produce $1.6 billion in free cash, which it intends to return to investors through continued share repurchases. [Read on]( to discover two other companies that could benefit from increased oil demand. --------------------------------------------------------------- [Smart Speaker] Not sure what to ask your smart speaker? Keep up with what's happening in the market by adding our daily flash briefing to your home assistant. Just look for The Motley Fool on your Amazon Alexa or Google Home app, click subscribe, and then you're good to go. --------------------------------------------------------------- 3 Reasons to Avoid the Lyft IPO Ride-sharing company Lyft recently filed paperwork for an initial public offering (IPO) that would value the business as high as $23 billion. It will be the first ride-sharing stock to hit the public markets, with shares expected to begin trading on March 29. In its filing, Lyft highlighted its 103% revenue growth in 2018, as well as an increase in market share from 22% in December 2016 to 39% at the end of 2018. Despite Lyft's significant growth in revenue and market share, there are a number of reasons why investors may want to avoid the IPO: - Lyft's losses are deep and getting deeper: The company lost $911.3 million in 2018. - There are few barriers to entry: Autonomous cars are coming to market and riders and drivers use multiple ride-sharing services. - Shareholders will not receive equal voting rights: Lyft's co-founders Logan Green and John Zimmer will control nearly half of Lyft's voting rights, due to the company's dual-class structure. [Read the rest.]( --------------------------------------------------------------- FEATURED PODCAST --------------------------------------------------------------- [Rule Breaker Investing]( Does ESG Work? Environmental, Social, and Governance or ESG Investing has gained in popularity in recent years. However, many ask whether investing in companies that are good for the world are also good for investing returns. Motley Fool co-founder David Gardner dives into these concerns and more on this episode of Rule Breaker Investing. [Subscribe on iTunes]( --------------------------------------------------------------- Quick Reads - [Tesla's latest end-of-quarter delivery push]( Tesla is asking workers to help find more volunteers to deliver 30,000 vehicles during the last two weeks of the quarter - [3 Blue Chip Stocks That Just Hit 52-Week Highs: Are They Buys?]( Two medical-device makers and one big drug maker are on a roll. But can their momentum continue? - [Apple unveils new iPads]( What do the new iPad Mini and iPad Air mean for the device manufacturer? --------------------------------------------------------------- TWEET OF THE WEEK --------------------------------------------------------------- [If you look for validation of your investing or business decisions in the short term, you're looking in the wrong place.]( [See all our Tweets]( Join the 1,300,000+ people who follow us! 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