Pharmaceutical company Bristol Myers Squibb (NYSE: BMY) recently announced that it will sell its manufacturing facility in East Syracuse, NY, to a Korean conglomerate, LOTTE Corporation. The financial terms of the deal, which is expected to close in the second half of 2022, have been kept under wraps.
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Following the news, shares of Bristol Myers slipped marginally to close at $75.61 in Friday’s extended trading session.
Following the deal, LOTTE will acquire the site’s operations and assets, including its workforce and technical capabilities. Under a new contract development and manufacturing organisation (CDMO), LOTTE will manufacture products for Bristol Myers Squibb from the East Syracuse facility.
The site will continue to operate under Bristol Myers Squibb’s manufacturing network until the deal concludes.
Management Commentary
The Executive Vice-President of Global Product Development and Supply at Bristol Myers Squibb, Karin Shanahan, said, “The East Syracuse site has been an important part of our company’s history and our manufacturing network for many decades, and we are confident that LOTTE will fully leverage the facility, its capabilities and its experienced workforce as it continues to play a vital role for patients around the world.”
Stock Rating
Consensus among analysts is a Moderate Buy based on six Buys, two Holds and two Sells. BMY’s average price target of $76.30 implies upside potential of 0.66% from current levels. Shares have gained 15.8% over the past year.
Conclusion
With this deal, LOTTE’s aim of enhancing its CDMO offerings to the medical industry is expected to receive a boost. Meanwhile, Bristol Myers’ manufacturing networks are likely to remain unhurt as LOTTE will continue to manufacture products for the company. The deal appears to be a win-win for both companies.
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