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Healthcare giant Johnson & Johnson, which is based in the U.S., will acquire Actelion a biotech company based in Switzerland in an all-cash deal for $30 billion that will include spinning off the research and development arm of Actelion said both companies Thursday morning.
This acquisition will give J&J much wanted access to the lineup that the Swiss group has of high-priced, high-margin medicines used to treat rare diseases. This will help it to diversify the drug portfolio it has as its most popular product, Remicade, used to treat arthritis is facing less expensive generic competition.
The offer of $280 per share has come following a number of weeks of talks. It was approved unanimously by both companies board of directors.
This deal is a premium of 23% over the closing price of Actelion as of Wednesday and close to 80% higher that the closing price of November 23, 2016 prior to the initial reports emerging that the biggest European biotech company was attracting takeover interest.
Shares of Actelion soared by 20.3% as investors welcomed this deal. One analyst in Geneva said that the deal was structured very attractively for an Actelion investor.
The price is a vindication for the strategy of Jean-Paul Clozel the cardiologist who cofounded the business with Martine his wife, who is a pediatrician, and some friends back in 1997.
He fended off numerous bids during the years believing that he could increase the value of Actelion through remaining independent.
The price of the deal is high at close to 30 times the price of estimated earnings for 2018 and J&J will pay a lot without the R&D included, said one trader based in Zurich.
However, he added, it represents just 10% of the healthcare giant’s market capitalization and they will finally invest cash they have been holding in Europe.
Actelion has attracted takeover speculation for a number of weeks after discussions were launched then ended by J&J. Sanofi the drug maker based in France had been interested as well said sources close to the just completed deal.
However, J&J returned to the negotiating table with Actelion in December and held exclusive negotiations.
The failure of Sanofi to close a big deal marked the second time that has happened of late and added much pressure to the company’s management.
J&J announced that it expected this deal to be accretive immediately to his per share adjusted earnings and accelerate revenue as well as earnings’ rate of growth.