After negotiations dating back to August, Johnson & Johnson (NYSE: JNJ) has agreed to acquire Swiss biopharma Actelion (SIX: ATLN) for $280 per share in cash (about CHF280), far outstripping Morningstar’s fair-value estimate of CHF112. J&J plans to use US dollars held in Europe to pay for the roughly $30 billion pickup, which will add a lucrative stable of drugs to its portfolio. The deal is expected to close by the end of next quarter.
The transaction will result in Actelion spinning out its drug-discovery and early-stage clinical development operations into a new company—the aptly named R&D NewCo—which will be listed on the Swiss stock exchange. J&J will initially hold a 16% stake in the new company, along with rights to an additional 16% stake through a convertible note.
J&J first sat down with Actelion late last summer, according to The Wall Street Journal, before the companies made their courtship public in November. French drugmaker Sanofi (NYSE: SNY) made an attempt to cut in when talks temporarily stalled, but J&J ultimately returned to engage Actelion exclusively.
As J&J's autoimmune-therapy drug Remicade, the company's best-selling offering in the US during 2015, now faces competition from Inflectra, a copy created by Pfizer (NYSE: PFE), pricing pressures from generics go a long way toward explaining the 23% premium paid for Actelion over its closing price on Wednesday. The sticker price amounts to an 80% over its closing price on November 23, when reports came out about J&J’s interest. Shares in Actelion had traded at a low of CHF135.30 just a couple weeks earlier. On Thursday, Actelion stock leaped over 19% to close at CHF271.60, while J&J shares held steady.