The Strategist

Johnson & Johnson buys Actelion for $ 30 billion

01/26/2017 - 15:16

American biotech corporation Johnson & Johnson announced acquisition of Swiss pharmaceutical company Actelion Pharmaceuticals Ltd. for $ 30 billion with spin-off of the research division into an independent company, said J&J in a report.

Open Grid Scheduler / Grid Engine via flickr
Open Grid Scheduler / Grid Engine via flickr
The deal has already been approved by boards of directors of both companies, and is expected to be closed in the I quarter of 2017. Johnson & Johnson buys Actelion shares at a price of $ 280 per share. The prize is 23% of the paper’s value at the close of trading on 25 January.

The deal will be one of the largest for the American company. J&J is a world leader in manufacture of medical products, and acquisition of Actelion will allow it to replenish its product range with a new category of drugs.

Previously, French Sanofi SA also considered buying Actelion. In December, J&J and Actelion’s negotiations were interrupted for a few days as the US company was about to abandon the deal. Later, however, the parties returned to discussing conditions of the deal.

Before the breakdown of negotiations in December, Johnson & Johnson offered $ 260 per Actelion’s share, while Sanofi improved its offer to $ 275. 

"We believe that this transaction will bring economic benefits, which will serve as a convincing argument for both Johnson & Johnson’s and Actelion shareholders", - commented Chairman of the Board and Chief Executive Officer of Johnson & Johnson Alex Gorski.

The transaction is aimed at obtaining Actelion’s developments in treatment of rare diseases, such as pulmonary hypertension. Upon completion of the transaction, Actelion will create a separate company with similar functions, called R & D NewCo. Johnson & Johnson will own 16% of the new company’s shares with an option to increase its stake to 32%.

R & D NewCo. will be headed by Actelion’s current executive Jean-Paul Clozel. Chairman of the Swiss company’s board Jean-Pierre Garnier will hold the same position in the new company.

Johnson & Johnson, founded in 1886, is one of the world's largest manufacturers of cosmetic, sanitary goods and medical equipment. It occupies the 37th place in the Fortune 500 list, which includes most major US companies according to American magazine Fortune.

In IV quarter 2016, sales of Johnson & Johnson’s prescription drugs increased by 2.1% to $ 8.2 billion thanks to growing demand for new products, including Imbruvica, Darzalex and Xarelto, the company said on its website.

Xarelto’s sales increased by 21.1% and amounted to $ 598 million. For drug Imbruvica, the index rose by 47.2% to $ 346 million. Quarterly sales of Darzalex reached $ 200 million.

Total quarterly sales of Johnson & Johnson rose by 1.7% to $ 18.1 billion while analysts had forecast of 18.3 billion.

Quarterly net income increased by 18.6% to $ 3.8 billion.

For the entire 2016, volume of Johnson & Johnson’s prescription drug sales rose 6.5% to $ 33.5 billion. Total annual sales of the company climbed up by 2.6% to $ 71.9 billion.

In 2016, net profit increased by 7.3% to $ 16.5 billion.

According to Johnson & Johnson’s forecast, in 2017 the company’s sales volume will increase by 4-5% and will amount to 74,1-74,8 billion. Earnings per share are expected to be within 6,93-7,08 dollars.