Bristol-Myers Squibb Company (NYSE:BMY) and Celgene Corporation (NASDAQ:CELG)  announced on Thursday that they have entered into a definitive merger agreement.

Bristol-Myers Squibb will acquire Celgene in a cash and stock transaction with an equity value of approximately USD 74 Billion.

Under the terms of the agreement, Celgene shareholders will receive one Bristol-Myers Squibb share and USD 50.00 in cash for each share of Celgene. The Boards of Directors of both companies have approved the combination.

In early trading on Thursday shares for the cancer drugmaker Celgene gained 28% to around USD 85 per share. However, Bristol-Myers Squibb shares dropped to 11%

For Celgene the merger is proving to be very beneficial, considering the company was going to lose patent protection by 2022 for its most profitable drug, Revlimid. Over the past year Celgene’s stock has fallen more than 37%.  

The transaction will create a leading focused specialty biopharma company well positioned to address the needs of patients with cancer, inflammatory and immunologic disease and cardiovascular disease through high-value innovative medicines and leading scientific capabilities. With complementary areas of focus, the combined company will operate with global reach and scale, maintaining the speed and agility that is core to each company’s strategic approach.

As one entity the company will have nine products with more than USD 1 Billion in annual sales. The transaction will allow for significant potential growth in oncology, immunology and inflammation and cardiovascular disease. The deal is expected to realize USD 2.5 Billion in synergies by 2022.

Giovanni Caforio, M.D., Chairman and Chief Executive Officer of Bristol-Myers Squibb said, “As a combined entity, we will enhance our leadership positions across our portfolio, including in cancer and immunology and inflammation. We will also benefit from an expanded early- and late-stage pipeline that includes six expected near-term product launches. Together, our pipeline holds significant promise for patients, allowing us to accelerate new options through a broader range of cutting-edge technologies and discovery platforms.”

Bristol-Myers Squibb shareholders will own approximately 69% of the company, and Celgene shareholders are expected to own 31%.

Giovanni Caforio, will continue to serve as chairman and CEO of the combined companies. Two members from Celgene's board will be added to the board of Bristol-Myers Squibb.

“For more than 30 years, Celgene’s commitment to leading innovation has allowed us to deliver life-changing treatments to patients in areas of high unmet need. Combining with Bristol-Myers Squibb, we are delivering immediate and substantial value to Celgene shareholders and providing them meaningful participation in the long-term growth opportunities created by the combined company,” said Mark Alles, Chairman and Chief Executive Officer of Celgene.