Johnson & Johnson pays big for Swiss biotech firm Actelion

Maxine SotoJan 27, 2017

Trump has also said he wants USA companies to bring trillions of dollars in offshore cash back home, arguing that the money could be used to fund a manufacturing renaissance. The company retains its rating given its large scale, diversity and strong profit margins, the ratings company said.

The shares of R&D NewCo will be distributed to Actelion's shareholders as a stock dividend and the new unit will be launched with 1 billion francs in cash.Urs Beck, fund manager at EFG Asset Management that holds Actelion shares, hailed the transaction."J&J is a good partner with a huge distribution network". The drugmaker's debt levels are likely to grow over time.

The deal is expected to close by the end of the second quarter of 2017.

Or, as J&J puts it in a statement announcing the agreement, "Actelion has established a leading franchise of differentiated, innovative products for pulmonary arterial hypertension (PAH) that is highly complementary to the existing portfolio of the Janssen Pharmaceutical Companies of Johnson & Johnson".

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J&J said it expects the transaction to increase its long-term revenue growth rate by at least 1 percent and its long-term earnings growth rate by 1.5 to 2 percent.

Actelion shares surged 21 percent to 273.90 Swiss francs as of 12:54 p.m., after having climbed 68 percent since early November.

The American healthcare giant will pay $280 for each share and plans to spin-off Actelion's R&D unit into a separate business listed in Switzerland.

Meanwhile, Sanofi is left empty- handed for the second time after losing out on cancer treatment manufacturer Medivation to another United States giant, Pfizer, in August.

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"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). "R&D NewCo will be led by an experienced and proven scientific team", Jean Pierre Garnier, chairman of the board of R&D NewCo, said. Until now, Clozel and his wife had resisted takeover bids over the years.

J&J will own an initial 16 percent stake in the new research-and-development company, with an option to purchase an additional 16 percent. Bank of America Actelion's lead adviser, with Credit Suisse Group AG also providing advice. Legal advisers to Actelion are Niederer Kraft & Frey; Wachtell, Lipton, Rosen & Katz; and Slaughter and May.

Bloomberg contributors: Phil Serafino, James Paton, Johannes Koch, Michelle Fay Cortez and Lynnley Browning.

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