March 24, 2017

Johnson & Johnson agrees to acquire biotech company Actelion for $30bn

27 January 2017, 12:44 | Felicia Christensen

After an off-and-on-again pursuit, Johnson & Johnson this morning landed Swiss biotech company Actelion in a $30 billion all-cash deal unanimously approved by both boards.

As part of the deal, worth $280 a share, Actelion will spin out its drug discovery unit, as well as its early-stage assets into a newly created Swiss biopharma known as the slightly uninspiring name of "R&D NewCo". J&J will initially hold 16 percent of the shares of R&D NewCo and will have rights to an additional 16 percent of its equity through a convertible note.

With the purchase, J&J - the world's biggest maker of healthcare products - is fulfilling its goal of adding a new drug category and dealing a blow to France's Sanofi, which also sought to acquire Actelion. The US behemoth expects the transaction to boost its long-term profit growth by as much as 2% over analysts' expectations. The transaction is expected to close by the end of the second quarter, with J&J commencing the tender offer by mid-February. J&J ended at US$112.80 in NY, capping a 11.5 per cent increase past year.

Actelion shares surged 21% to 273.90 Swiss francs as of 12.54pm, after having climbed 68% since early November. However, Johnson & Johnson withdrew from the discussions in mid-December, and Sanofi approached Actelion about a deal.

The companies plan to hold a call with investors at 8 a.m. This is the second time the French drugmaker will be left empty-handed, after losing out in August on Medivation, a biopharmaceutical that makes cancer treatments, to another USA giant, Pfizer.

Actelion pioneered the treatment of pulmonary arterial hypertension, or PAH, in 2001 with the introduction of Tracleer, and still dominates the $5 billion global market.

"The deal with J&J comes just days after Actelion reported that its marketed oral endothelin receptor antagonist, Opsumit (macitentan), failed to meet its primary endpoint in a Phase III study in patients with pulmonary arterial hypertension due to Eisenmenger Syndrome", according toGEN (Genetic Engineering and Biotechnology News).

The Clozels and a team of scientists who split from Roche Holding founded Actelion about 20 years ago. The CEO is a believer in Actelion's pipeline of experimental medicines, and he and his wife have resisted takeover bids through the years.

Lazard is acting as lead financial advisor to J&J and Citibank is also providing financial guidance. Bank of America is Actelion's lead adviser, with Credit Suisse Group also providing advice. Legal advisers to Actelion are Niederer Kraft & Frey; Wachtell, Lipton, Rosen & Katz; and Slaughter and May.

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