Bristol Myers Squibb treasury: the strategic force behind successful M&A and financial resilience
Bristol Myers Squibb (BMS), an American multinational pharmaceutical company, has demonstrated resilience and strategic agility in managing its treasury operations. The team has navigated multiple acquisitions in the last half a decade, with each bringing distinct challenges that demanded a proactive and deeply collaborative approach.
A key factor in the treasury team’s success was the development of detailed cash flow models. These models allowed the team to assess various funding scenarios and ensure that BMS was well-prepared for any capital market disruptions. Keith Gaub, vice president &assistant treasurer highlighted, “We created a very dynamic and robust cash flow model that could flex across multiple scenarios, delivering a dependable output which we leverage in the decision making and structuring of our financing requirements.” This proactive approach involved real-time updates and close collaboration with various departments. “We worked very closely with Strategic Finance, Business Development Finance, and several other teams across BMS, incorporating their updated financial projections into our cash flow forecasting process, to provide frequent capital requirement updates to management.” Gaub noted, emphasising the level of coordination required across the organisation.
BMS has been recognised as the winner of the Financing & Liquidity Award. This accolade highlights the company’s effective navigation of a challenging landscape marked by regulatory changes and increased competition. BMS’s treasury team played a crucial role in the successful closing of three acquisitions, by designing and launching a $12 billion contingent liquidity facility, subsequently taken out by combined capital markets transactions totalling $17.5 billion, and a $3 billion commercial paper issuance.
“We are incredibly honoured to receive the Financing and Liquidity award, following last year’s recognition for Risk and Resilience. This achievement is a significant milestone in our ongoing transformational journey. It underscores our team’s dedication to redefining excellence in treasury management, as we continue to innovate and adapt to rapidly changing financial and industry landscapes,” Sandra Ramos-Alves, senior vice president and treasurer said.
“Our focus on delivering value to the enterprise while simplifying and automating processes has been key to our success, and winning these prestigious awards consecutively is a testament to the strategic vision and collaborative spirit that drive the Bristol Myers Squibb treasury team’s continuous efforts,” Ramos-Alves added.
Expanding horizons and strengthening capabilities
BMS’s M&A strategy has been instrumental in shaping its growth and market positioning. The $74 billion acquisition of Celgene Corporation in 2019 marked a transformative moment for the company. Tommy Chung, executive director of capital markets reflected on the complexity of this integration: “Integrating Celgene was no small feat. It involved aligning cash flow models and harmonising financial systems across two large organisations. Our primary objective was to ensure that the combined entity could operate seamlessly while maximising the strategic value of the acquisition.”
Abhishek Jhunjhunwala, director of capital markets elaborates on these strategic moves: “The acquisitions were strategic expansions that aligned with our long-term vision. Integrating these companies required meticulous planning and execution to ensure that we could fully leverage their strengths and align them with our overarching goals.”
Managing ratings and investor relations
Beyond securing funding and managing cash flow, the BMS treasury team played a critical role in maintaining the company’s credit rating and managing investor relations, Ramos- Alves emphasised the importance of treasury’s involvement from the start: “We are part of the strategic team, working upfront with Business Development. Our credit rating is really important to us”.
The team’s ability to communicate effectively with investors was also crucial. “We knew that there was potential ratings action, and it was critical to have investor calls. We wanted to ensure that we communicated our message to our fixed-income investors,” Ramos-Alves noted. This proactive communication strategy helped BMS navigate potential ratings changes and set clear expectations with bondholders and rating agencies.
Gaub described how the size and timing of the acquisitions required swift action to secure the necessary capital. This strategy included using delayed draw term loans and a 364-day revolving credit facility as a synthetic bridge, showcasing the team’s ability to adapt quickly to market conditions. “We put those in place very quickly,” Gaub emphasised, underscoring the team’s agility in managing unforeseen challenges.
Chung highlighted the challenges faced: “Managing the financial aspects of these acquisitions involved a comprehensive approach. We had to integrate different financial systems, optimise liquidity management, and ensure that our cash flow modelling was robust enough to accommodate the increased scale of operations. It was essential to maintain financial stability while executing these integrations.”
Jhunjhunwala explained the financial strategy, “Financing large-scale acquisitions requires a delicate balance. We aimed to optimise our capital structure to support growth while managing our debt levels prudently. This approach was crucial in maintaining our financial health and ensuring that we had the flexibility to respond to future opportunities.”
Navigating challenges and seizing opportunities
The impact of multiple acquisitions extends beyond financial integration. BMS has had to address various challenges, including managing patent cliffs and navigating regulatory uncertainties. The Celgene acquisition, for instance, introduced a portfolio of products facing potential patent expirations. This necessitated a strategic approach to revenue management and R&D investment.
Chung emphasised the importance of proactive planning: “Managing patent cliffs requires foresight and strategic planning. We have focused on investing in new research and development initiatives to offset potential revenue declines from expiring patents. This proactive approach helps ensure that we continue to drive innovation and maintain our competitive edge.”
Moreover, the acquisitions have provided BMS with new opportunities to strengthen its market position and expand its reach. Jhunjhunwala described the broader impact adding, “Each acquisition has opened up new avenues for growth and innovation. By integrating these assets effectively, we are well-positioned to advance our leadership in key therapeutic areas and drive long-term success. The expanded portfolio and enhanced R&D capabilities allow us to address evolving market needs and stay at the forefront of medical innovation.”
He also emphasised the importance of investor engagement: “Engaging with investors and communicating our strategic vision is essential. The BMS leadership team prioritises transparency and provides regular updates on how our acquisitions are contributing to ourgrowth and value creation. This helps build investor confidence and aligns their expectations with our long-term objectives.”
Chung added, “Our interactions with investors involve highlighting the strategic rationale behind each acquisition and its expected impact on our financial performance. By demonstrating how these acquisitions align with our growth strategy and contribute to value creation, we aim to reinforce investor trust and support.”
The future of strategic growth and treasury management
Looking ahead, BMS’s strategic approach to M&A and treasury management will remain central to its growth strategy. The company’s ability to integrate new acquisitions effectively, manage financial complexities, and leverage new opportunities will be crucial in sustaining its success.
Chung reflected on the future outlook: “Our focus will be on maintaining a strong financial position while pursuing strategic growth opportunities. Effective treasury management and integration strategies will continue to be key in navigating the evolving landscape and achieving our long-term objectives.”
Jhunjhunwala added, “Our commitment to aligning M&A activities with our strategic vision will guide our future endeavours. By continuing to innovate and adapt our financial and operational strategies, we are confident in our ability to drive sustained success and remain a leader in the pharmaceutical industry.” Gaub summed up the collective effort, stating, “The way that all these pieces came together was a team effort. We’re certainly proud of what we accomplished in treasury, but this was a very collaborative effort across the organisation.” The journey highlights the critical role that treasury teams play in navigating the complexities of M&A, ensuring financial stability, and supporting the broader strategic goals of the company.