Bristol-Myers and Squibb Slate Merger : Stock-Swap Would Create 2nd-Largest Pharmaceutical Firm

In a surprise announcement today, Bristol-Myers Co. and Squibb Corp. said they have agreed to merge in an $11-billion stock-swap deal that would create the world’s second-largest pharmaceutical concern.

Under terms of a definitive agreement approved by the boards of both companies, Squibb would be merged into Bristol-Myers through a tax-free exchange of 2.4 shares of Bristol-Myers common stock for each Squibb share.

Based on Bristol-Myers’ stock price today, the deal is valued at $11.35 billion.

The merged company would be known as Bristol-Myers Squibb Co., and its common stock would be traded on the New York Stock Exchange. The deal, subject to shareholder approval, is expected to be completed in October.

Squibb to Keep Identity

The combined companies said they would have annual revenue exceeding $8.6 billion, ranking Bristol-Myers Squibb behind Rahway, N.J.-based Merck & Co. The merged company would have a market value of $25.4 billion based on today’s stock prices.

The combined companies would surpass the revenues of SmithKline Beecham, the company formed by Wednesday’s merger of Smithkline Beckman Corp. with Beecham Group PLC of Britain.

In a joint statement, the companies said Squibb would retain its identity and continue to market its products under the Squibb name and trademarks.

Richard M. Furlaud, Squibb’s chairman and chief executive, would serve as president of the merged company; Bristol-Myers Chairman and Chief Executive Richard L. Gelb would serve as chairman and chief executive.

Bristol-Myers, headquartered in New York, makes Excedrin and Bufferin pain relievers, Clairol personal products, household products such as Drano drain cleaner and numerous prescription medicines.

Squibb manufactures and markets a wide variety of prescription drugs. The company is headquartered in Princeton, N.J.