The American base medical and pharmaceutical manufacturer is currently in a complex dealing with the Swiss-based biotech Company Actelion. The deal is going to be around a whopping $30 billion, including its research and development pipeline on an announcement this Thursday.
The biggest and largest healthcare company is currently closing the deal with Actelion, betting an estimated amount of $280 per share in an all-cash offer for its shareholders, including shares in the new research and development company R&D New Co. which is spearheaded by the company’s CEO and founder Jean-Paul Clozel. J&J would fund the researches R&D will conduct form cash that is held outside the U.S.
J&J Sees Great Opportunities with the Merging
Johnson and Johnson has particularly been stumbling down these past few weeks, the company’s quarterly results are projecting a continuous decline, according to J&J’s chairman and CEO Alex Gorsky, “We believe this transaction offers compelling value to both Johnson & Johnson and Actelion shareholders,” The company sees that the transaction will bring immediate accretive to its adjusted earnings per share and boost its revenue and earnings growth rate. While Actelion’s share rose around 20.3 percent to 273.60 francs today as investors welcomed the deal.
The deal is above and higher than expected. A Zurich-based analyst noted that “The price is quite high at around 30 times price to estimated 2018 earnings. J&J is paying a lot and R&D is not even included, just a substantial minority stake,” Also, Eleanor Taylor Jolidon of Union Bancaire Privee in Geneva noted that the deal’s structure is “very attractive” and that the Actelion’s portfolio is showing a very strong and attractive composition which alluded J&J.
Actelion’s Decision to Be Independent for 20 Years
Clozel’s strategy has definitely increased the deal’s total price; the cardiologist has recently been waving down bids over the past years, believing that Actelion’s value would increase if it stays independent. Since the company’s nativity last 1997 in Basel, CEO Clozel has been opposing any possible takeover and/or acquisitions. But last September, he released an announcement to its investors saying that he needs another three or four more years to take the company to greater heights.
While the new R&D New Co. will be divided to Actelion’s shareholders and the new unit will be launched with 1 billion francs in cash. EFG Asset Management the holds Actelion’s shares Urs Beck said “J&J is a good partner with a huge distribution network. For Actelion’s founders that are certainly a good solution. Mr. and Ms. Clozel (Martine Clozel is chief science officer) can do research for another 20 years and J&J has gained an interesting indication,” and “It’s a huge deal and J&J plays in a different league from Sanofi, they can finance that without difficulties. I don’t see Sanofi stepping in with a higher offer at some point, that doesn’t make sense anymore.”
Johnson and Johnson will be holding on 16 percent stake in R&R New Co. for the mean time and will be lacking any rights to an additional 16 percent of the company’s equity through a convertible note. It will also be presented with the option on ACT-132577, R&D’s product that is developed for resistant hypertension and now in phase 2 clinical developments. J&J will be looking to preserve Actelion’s workforce and production presence in Switzerland.
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