Bristol-Myers Squibb will sell its last non-biopharmaceutical holding, a majority stake in Mead Johnson Nutrition, the company said. The pediatric nutrition company produces Enfamil baby formula and is a leading supplier of children’s nutritional products globally. Bristol-Myers’ move, part of a wider healthcare divestment strategy, will help the company improve its overall financial position and open the door to the pursuit of strategic business development opportunities, says CEO James Cornelius.

 

The pharmaceutical giant holds 83 percent of Mead Johnson, which completed an initial public offering in February. Since then, shares of Mead Johnson have risen to about $43 a share from $24 per share, an increase of nearly 80 percent. When the spin-off is complete, Bristol-Myers expects the transaction to be net cash flow positive to its biopharmaceutical business and accretive to earnings beginning in 2010.

 

“Now is the right time to move forward with a spin 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,” says Cornelius. “With a successful execution of this spin-off, we fully consider ourselves a biopharma company.”

 

Bristol-Meyers management had not initially expected to spin off its share in Mead Johnson so soon. However, Cornelius told investors November 16 that the company’s “near-term pipeline and clinical studies, which for the most part are extremely encouraging,” and that with the skyrocketing value of Mead Johnson’s stock, “the stars are literally lined up” to try the transaction before Christmas.

 

Bristol-Myers Squibb shareholders will be able to exchange some, none or all of their shares of Bristol-Myers Squibb common stock for shares of Mead Johnson common stock at a rate that will be finalized by December 11. By the end of 2009, Bristol-Myers expects to have a projected cash balance of $10 billion.