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Johnson & Johnson Acquires European Biotech Giant Actelion For $30 Billion
01-26-2017, 08:34 AM,
#1
Johnson & Johnson Acquires European Biotech Giant Actelion For $30 Billion
Johnson & Johnson Acquires European Biotech Giant Actelion For $30 Billion

<p>Concluding weeks of speculation, overnight Johnson &amp; Johnson announced it agreed to acquire Actelion Pharmaceuticals, Europe’s biggest biotech company, for $30 billion, or CHF280 per share, expanding the U.S. pharma giant’s portfolio of rare-disease treatments as its top-selling drug faces new competition. </p>
<p>The deal, announced and agreed on Thursday by both companies, ends weeks of seesaw negotiations. J&amp;J initially abandoned talks over price, only to resume them about a week later after the companies entered into exclusive negotiations. The deal is expected to close by Q2 2017. Shares in Swiss company Actelion surged 21% following the announcement. </p>
<p>“We believe this transaction offers compelling value to both Johnson &amp; Johnson and Actelion shareholders,” said J&amp;J Chairman and Chief Executive Alex Gorsky in a statement.</p>
<p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/01/15/actellion%20teaser.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/01/15/actellion%20teaser_0.jpg" width="500" height="217" /></a></p>
<p>J&amp;J wil retain Actellion’s commercially available treatments for rare diseases such as an artery disorder known as pulmonary arterial hypertension. Actelion will spin off its drug-discovery R&amp;D operations into a separate company designated for now as R&amp;D NewCo, and J&amp;J will initially hold 16% of the shares of the new company, with an option to acquire another 16%.</p>
<p>As the <a href="http://www.wsj.com/articles/johnson-johnson-to-acquire-rare-disease-drug-maker-actelion-in-30-billion-deal-1485413057">WSJ notes</a>, the deal comes as J&amp;J’s autoimmune therapy drug Remicade, which generated $4.5 billion in U.S. sales in 2015 and is the company’s top-selling drug, faces new competition from the U.S. launch of Pfizer’s copy drug, Inflectra. J&amp;J has said that it has several new drugs in development that could offset any revenue loss from this rivalry, but the Actelion acquisition would more quickly help plug that hole.</p>
<p>Actelion, founded in 1997 by husband-and-wife team Jean-Paul and Martine Clozel along with other former Roche Holding Ltd. employees, has resisted past takeover overtures. Under the J&amp;J deal, Mr. Clozel will remain involved in the operation, overseeing R&amp;D NewCo.</p>
<p><strong>Summary of key terms from BBG: </strong></p>
<ul>
<li>All-cash tender offer in Switzerland for Actelion at $280/share, payable in U.S. dollars, equates to CHF280.08/share as of Jan. 25</li>
<li>Conditional upon at least 67% of all Actelion shares that are issued and outstanding at the end of the offer period, which may be extended, tendering into the offer</li>
<li>Approval of Actelion shareholders of distribution of the shares of R&amp;D NewCo at the EGM called for this purpose</li>
<li>Regulatory approvals</li>
<li>Tax clearances for spin-off of R&amp;D NewCo received from Swiss Federal and the Basel-Landschaft cantonal tax authorities</li>
<li>Actelion prepared to pay price per tendered share to retail shareholders in CHF and therefore provide a wholesale exchange facility</li>
<li>Jean-Paul Clozel committed to tender all Actelion shares he owns into the offer and vote his shares in favor of the transaction at the EGM</li>
</ul>
<p><strong>Spin-Out:</strong></p>
<ul>
<li>Immediately prior to completion of acquisition, Actelion will spin out its drug discovery operations and early-stage clinical development assets into a newly created Swiss biopharmaceutical company (R&amp;D NewCo)</li>
<li>Shares of R&amp;D NewCo, which will be listed on SIX, will be distributed to Actelion’s shareholders as a stock dividend upon closing of tender</li>
<li>J&amp;J will initially hold 16% of shares of R&amp;D NewCo and have rights to an additional 16% of R&amp;D NewCo equity through a convertible note</li>
<li>J&amp;J will also receive an option on ACT-132577, a product within R&amp;D NewCo being developed for resistant hypertension currently in phase 2 clinical development</li>
<li>R&amp;D NewCo will be led by Actelion’s current scientific team with Jean-Paul Clozel, MD, Chief Executive Officer and founding member of Actelion, as CEO</li>
<li>Jean Pierre Garnier, chairman of Actelion board, will be chairman of board of R&amp;D NewCo.</li>
</ul>
<p><strong>Financing:</strong></p>
<ul>
<li>J&amp;J will fund the transaction with cash held outside the U.S.</li>
</ul>
<p><strong>Rationale/Synergies:</strong></p>
<ul>
<li>Transaction expected to be immediately accretive to J&amp;J EPS, accelerate revenue and earnings growth rates, while enhancing long-term growth and value creation of the Janssen Pharmaceuticals business</li>
<li>Post-transaction close, J&amp;J expects transaction to increase long-term revenue growth rate by at least 1% and long-term earnings growth rate by 1.5% - 2.0% above current analyst consensus</li>
<li>J&amp;J estimates EPS accretion in first full year of $0.35 to $0.40</li>
<li>Johnson &amp; Johnson shareholders are also expected to realize additional value from the Johnson &amp; Johnson ownership interest in R&amp;D NewCo. </li>
</ul>
<p><strong>Key Dates:</strong></p>
<ul>
<li>J&amp;J to file a prospectus and commence tender offer by mid-Feb.</li>
<li>EGM is expected to be held in 2Q of 2017</li>
<li>Transaction expected to close by end of 2Q of 2017</li>
<li>Feb. 14: Actelion FY results</li>
<li>Feb. 16: J&amp;J expected at Leerink Partners Global Health Care Conference</li>
<li>Feb. 22: J&amp;J expected at CAGNY Investor Conference</li>
<li>March 3: Tender offer opens (assumes prospectus published on Feb. 16 among other things)</li>
<li>March 30: Tender offer expected to close</li>
<li>April 6: Additional acceptance period expected start</li>
<li>April 18: J&amp;J 1Q results due</li>
<li>April 20: Actelion 1Q results</li>
<li>April 21: Additional acceptance period expected close</li>
<li>May 4: Expected Actelion AGM</li>
</ul>
<p><strong>Advisors:</strong></p>
<ul>
<li>Lazar lead financial advisor to J&amp;J with Citibank also providing financial advice on certain matters; Cravath, Swaine &amp; Moore LLP, Homburger AG and SextonRiley LLP are serving as legal advisors</li>
<li>BofAML is Actelion’s lead financial advisor, with Credit Suisse also providing financial advice; Niederer Kraft &amp; Frey, Wachtell, Lipton, Rosen &amp; Katz, and Slaughter &amp; May are legal advisors</li>
</ul>


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