Johnson & Johnson (NYSE:JNJ) of New Jersey, United States has acquired the Swiss biotech company Actelion in a deal that is worth $30 billion. It was revealed that the all-cash deal also includes spinning off the Swiss firm’s research and development pipeline. So Actelion’s founder will now head a standalone research company.
The Johnson & Johnson Takeover Price of Actelion
Johnson & Johnson, which is the largest healthcare business in the world, is offering the shareholders of Actelion $280 for each stock, and new stocks of the new research and development firm, which Jean-Paul Clozel will head. This is a 23 percent premium over the closing price of the stock of Wednesday. However, it is 80 percent higher than the stock’s November 23 price, when the news of this acquisition first came out.
According to reports, the two businesses were in negotiation for weeks before this price could be agreed upon. Actelion (VTX:ATLN) was eventually happy with the offer, and the boards of both the companies have approved the acquisition and price unanimously.
Johnson & Johnson will be funding the deal from cash held outside the United States.
With this acquisition, J&J will now have access to Actelion’s high-price, but high-margin medicines to treat rare diseases. This will allow the American business to diversify their portfolio of drugs, which is critical particularly as their Remicade medicine for arthritis is facing increasing competition from cheaper alternatives.
Did Johnson & Johnson Have to Pay Too Much for Actelion?
Analysts are saying that the purchase price is higher than expected. A trader from Zurich says the purchase price is about 30 times more than the estimated earnings of the Swiss firm of 2018. He feels J&J is losing out as research and development are not included in the agreement. It is just a small minority stake. But he is still happy because Johnson & Johnson has finally decided to invest the cash they hold in Europe.
There has been speculation for weeks that Actelion is looking for a buyer. Johnson & Johnson (NYSE:JNJ) made a bid last year, and the discussions came to a halt, before starting again. The drug maker from France Sanofi was interested as well, but their price was not acceptable to the Swiss firm. Sanofi was sidelined once J&J came back to the discussion table and made a second bid in December.
The chairman and chief executive of J&J Alex Gorsky said, “We believe this transaction offers compelling value to both Johnson & Johnson and Actelion shareholders”.