From left: Johnson & Johnson Chief Scientific Officer Paul Stoffels, Actelion CEO and co-founder Jean-Paul Clozel and Johnson & Johnson Executive Vice President Joaquin Duato pose during a press conference of the Swiss bio-pharmaceutical firm at their hea
New York: Johnson & Johnson agreed to buy Actelion Ltd. for $30bn and spin off the Swiss drugmaker’s research and development operations, clinching its largest deal ever to become a leader in medicines for a rare type of high blood pressure.
J&J, which is funding the transaction with the cash it holds outside the US, will fulfill its goal of gaining a new drug category and see its earnings get an immediate boost from the transaction. The deal is expensive compared to recent industry takeovers such as Pfizer Inc.’s acquisition of Medivation Inc. and AbbVie Inc.’s purchase of Pharmacyclics Inc.,
The agreement caps two months of stuttering negotiations to find a deal structure palatable to Jean-Paul and Martine Clozel, Actelion’s founders. J&J will begin a tender offer to buy shares of Allschwil, Switzerland-based Actelion for $280 each in cash, the companies said in a statement.
The price, which equals 280.08 Swiss francs, is 23 percent above Wednesday’s closing level. The research and development operations will be spun off to Actelion shareholders as a new publicly traded company with 1 billion francs of cash. J&J will keep a 16 percent stake in the new company. 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.
It’s possible that the new US administration could present an obstacle to using overseas cash to fund the deal, Fazeli said.
J&J held $38.2bn in cash and equivalent securities through its foreign subsidiaries as of January 3, 2016. Repatriating all of the funds to the US could have tax implications, the drugmaker said at that time.
Access to Actelion’s drugs Tracleer, Opsumit and Uptravi, which all treat life-threatening pulmonary arterial hypertension, will make J&J a leader in treating the disease and help it expand beyond autoimmune, heart and cancer drugs.
The new deal will immediately start adding to J&J’s earnings when the transaction in completed by the end of the second quarter, the companies said.
