NEW YORK (Reuters) - Activist hedge fund Starboard Value LP on Friday abandoned a campaign to convince Bristol-Myers Squibb Co shareholders to vote down the drugmaker’s proposed $74 billion takeover of biotech Celgene Corp after the two leading proxy advisory firms backed the deal.

FILE PHOTO: Logo of global biopharmaceutical company Bristol-Myers Squibb is pictured on the blouse of an employee in Le Passage, near Agen, France March 29, 2018. REUTERS/Regis Duvignau/File Photo

The firms, Institutional Shareholder Services (ISS) and Glass Lewis, said earlier on Friday that Bristol-Myers shareholders should vote in favor of the deal.

“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 statement.

The hedge fund said it still plans to vote its shares against what it believes is a bad deal, but it will withdraw its proxy solicitation to get other shareholders to vote against it.

The move is a victory for New York-based drugmaker Bristol-Myers and its Chief Executive Giovanni Caforio, who have mounted their own campaign to shore up investor support for the deal. Bristol-Myers’ shareholders are set to vote on the acquisition on April 12.

Shares of Celgene rose 7.5 percent to $93.99 in early afternoon trading. Bristol-Myers shares were off 1.1 percent at $47.29.

Bristol-Myers announced in early January that it planned to buy Celgene in a cash and stock transaction valued at roughly $74 billion that would bring together companies that specialize in oncology and cardiovascular drugs in what would be the largest pharmaceutical industry merger ever.

But Starboard and the company’s second largest shareholder, Wellington Management, have opposed the deal. Starboard has called it “poorly conceived and ill-advised.” Wellington did not respond to requests for comment.

PROXY FIRMS ENDORSE DEAL

ISS and Glass Lewis, which advise large institutional investors as to how to vote on shareholder proxy proposals, both endorsed the strategic rationale for the deal, significantly increasing the chances that many big mutual funds would also back it.

The spread between Celgene’s share price and the value of the Bristol-Myers bid - a measure of investor confidence in the deal - tightened significantly on Friday to less than 4 percent, suggesting optimism that the transaction will close. It had been as wide as about 20 percent after the large investors announced their initial opposition to the deal.

If the deal is approved, Bristol-Myers shareholders will own 69 percent of the company and Celgene shareholders would own the remainder.

This is the biggest transaction Starboard has ever opposed. The firm argues the merger could destroy billions in shareholder value and that Bristol-Myers should not feel forced to do a deal right now.

Starboard has said it is ready to nominate five directors for the board. Glass Lewis argued that if the deal goes through, “we suspect Starboard won’t seek to get its director candidates on the board, but ultimately that could depend on the margin of votes cast on the merger proposal.”

Starboard has been stepping up its healthcare campaigns lately but has had mixed success previously in healthcare.

Perrigo Company Plc shares have lost more than a third of their value since giving Starboard board representation in 2017. Assertio Therapeutics Inc, previously known as Depomed, explored a sale three years ago under pressure from Starboard but did not reach a deal. Its shares have lost half their value since then.