J&J Clinches Actelion for $30 Billion

  • Under the agreement, J&J would take a minority stake of 16% in the research spinoff, with the right to acquire an additional 16% later, through a convertible note. @ Raysonho/wikipediaUnder the agreement, J&J would take a minority stake of 16% in the research spinoff, with the right to acquire an additional 16% later, through a convertible note. @ Raysonho/wikipedia

Johnson & Johnson (J&J) has won its battle to acquire Swiss biotechnology firm Actelion. The deal announced on Jan. 26 foresees the New Jersey, USA-based healthcare company, regarded as the world’s largest, paying $30 billion in cash – $280 per share – to take the prize.  The boards of both companies have unanimously approved the transaction, which is expected to close by the end of the second quarter if at least 67% of share capital agrees to the spinoff, and regulatory authorities also approve.

Under the agreement, J&J would take a minority stake of 16% in the research spinoff, with the right to acquire an additional 16% later, through a convertible note.  The participation would give it a stake in Actelion’s development pipeline, which includes an option on a phase 2 hypertension drug, ACT-132557.

The Swiss company’s founder and CEO, Jean-Paul Clozel, would serve as the spinoff’s chief executive, and Jean-Pierre Garnier, Actelion’s chairman, would be its chair. Reports said Clozel was due to receive $1.52 billion for his shares and would continue to be in control of the drug development. The R&D unit based in Allschwil, Switzerland, will specialize in small molecule therapeutics across several areas, including specialty cardiovascular, CNS and immunological disorders, along with orphan diseases.

News that J&J was in talks with Actelion first surfaced in November 2016, followed by reports  that the US suitor had backed out of negotiations, only to step back in after French competitor Sanofi positioned itself to jump into the fray.

The fact that Actelion’s FDA-approved drug to treat pulmonary arterial hypertension (PAH) recently failed a phase 3 trial meant to expand its market evidently did nothing to dampen J&J’s or the market’s ardor. The biotech’s shares traded up nearly 3% on the Zurich stock exchange after the announcement.

Analysts said this was because it has other opportunities to expand the franchise. The Swiss biotech firm has a second PAH drug, Uptravi, which they said may be even more attractive.

Analysts from Bloomberg Intelligence called the deal expensive compared with recent industry takeovers such as Pfizer’s acquisition of Medivation and AbbVie’spurchase of Pharmacyclics.

J&J is paying more than 21 times Actelion’s estimated 2020 earnings per share, more than double what AbbVie spent on its cancer biotech, they said. J&J is believed to hold about $42 billion in cash overseas. The new Republican government has pledged to rewrite the US tax code to allow – or possibly force – American companies to repatriate untaxed offshore funds at reduced rates

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