Activist investor Starboard Value has ended its fight against Bristol-Myers Squibb's buyout of biotechnology company Celgene after two prominent proxy advisors announced their support for the deal earlier on Friday.
The withdrawal comes hours after both Institutional Shareholder Services and Glass Lewis recommended Bristol-Myers shareholders vote in favor of its bid.
"Despite the substantial swell of support against this transaction, it is extremely difficult for shareholders to prevail without a supportive recommendation from ISS and Glass Lewis to vote against the transaction," Starboard said in a press release. "Therefore, Starboard has decided to withdraw its proxy solicitation to vote against the Celgene transaction."
Though Starboard said it still plans to vote against the transaction at the April 12 shareholder meeting, the decision to pull its proxy solicitation represents a defeat for the fund, which announced its opposition one month ago.
Though ISS and Glass Lewis do not have an official say in how investors vote their shares, global passive fund managers like Vanguard often factor in their recommendations when casting their ballots. Celgene shares rose more than 7 percent in midday trading, while Bristol-Myers dropped 0.2 percent.
"We are extremely disappointed by the conclusions reached by the proxy voting advisory firms," Starboard said. "We continue to feel strongly that the proposed transaction between Bristol-Myers and Celgene Corporation is a bad deal for shareholders that carries too much risk."
As of 12:46 p.m. ET Friday, Bristol's second-largest shareholder, the investment firm Wellington Management, remained opposed to the tie-up.
That's despite positive comments from ISS and Glass Lewis earlier Friday.
ISS said that "the transaction also significantly enhances BMY's pipeline, raising the number of late-stage drugs from one to six," ISS said, according to a Bristol-Myers press release Friday.
"Both companies' current products and their pipelines are focused on drugs that fight cancer and blood disorders," ISS added. "As such, the merger appears logical strategically, and likely to generate more synergies than one involving disparate pharmacological areas of focus."