Actelion Announcement

Traditional Coverage

1. J&J finally grabs Actelion's marketed meds for $30B, with R&D spinoff to come

   Jan 26, 2017 | FiercePharma

   By Carly Helfand
   
   
   Johnson & Johnson will pay $30 billion to gain Actelion's marketed meds, which brought in $1.8 billion in the first nine months of 2016.
2. J&J CEO Says Co. Will Continue to Look For M&A Opportunities

   Jan 26, 2017 | Bloomberg

   JNJ sees after-tax charges of $500m-$600m in 2017, and expects credit agencies to reaffirm AAA ratings after the Actelion transaction, management says on conference call. Co. said the deal calls for holding at least two year-interest in new company.
3. Actelion R&D NewCo May Be Worth CHF7.62 Per Share, Survey Shows

   Jan 26, 2017 | Bloomberg

   The research and development unit which is expected to be spun off to Actelion shareholders as part of the J&J takeover is estimated to be worth CHF7.62/share, according to a Bloomberg survey.
4. BAML and Lazard lead Johnson & Johnson's Actelion takeover; $30bn biotech acquisition is the largest deal announced so far this year

   Jan 26, 2017 | Financial News

   By Tim Burke
   
   
   Bank of America Merrill Lynch and Lazard have emerged with lead advisory roles on the largest takeover announced so far in 2017.
5. Johnson & Johnson Buys Actelion For $30 Billion

   Jan 26, 2017 | The Street

   By Edward Hardy
   
   
   Johnson & Johnson plans to spin out Actelion's R&D unit into a separate business
6. Charitable Act

   Jan 26, 2017 | Reuters Breakingviews

   By George Hav
   
   
   Johnson & Johnson has given Actelion investors a way around a classic M&A dilemma. Usually, shareholder delight at being offered a generous price entirely in cash is tempered by concern at missing out on future upside. The U.S. giant’s $30 billion bid lets them have both.
7. Johnson & Johnson to Acquire Actelion in $30 Billion Deal (Update 2)

   Jan 26, 2017 | Wall Street Journal

   By Brian Blackstone and Denise Roland
   
   
   Deal gives U.S. pharma giant access to Swiss firm’s rare-disease portfolio
8. Johnson & Johnson to snap up Swiss biotech company Actelion for $30bn

   Jan 26, 2017 | City A.M.

   By Shruti Tripathi Chopra
   
   
   Johnson & Johnson (J&J) is snapping up Europe's biggest biotech company Actelion in a $30bn (£23.7bn) deal.
9. Johnson & Johnson Bolsters Drug Roster With $30 Billion Actelion Deal (Update)

   Jan 26, 2017 | New York Times

   By Chad Bray
   
   
   Johnson & Johnson, the world’s largest health care company, has moved to bolster its roster of treatments for rare diseases, announcing a $30 billion deal on Thursday to acquire Actelion, a Swiss biotechnology firm.
10. BRIEF-Jupiter says J&J purchase of Actelion

    Jan 26, 2017 | Reuters

    Jupiter Fund Manager Mike Buhl-nielsen: Johnson & Johnson purchase of actelion is "very good outcome", says can see "clear synergies for j&j"
11. Sanofi's search for a growth engine continues after J&J secures Actelion

    Jan 26, 2017 | The Deal

    Sanofi SA' CEO Olivier Brandicourt must be tiring of losing biotech targets to American rivals.
12. J&J Pays Up for Scarcity With $30 Billion Actelion Deal

    Jan 26, 2017 | Bloomberg Gadfly

    By Chris Hughes
    
    
    Some entrepreneurs get rich because they want to make money, others as a result of pursuing their interest. For Bill Gates, it was software. For Jean-Paul Clozel, it is science.
13. Medical couple and butcher's boy win big from Actelion sale

    Jan 26, 2017 | Reuters

    By John Miller
    
    
    * Clozels and investor Maag each stand to gain around $1.5 bln
14. Actelion top-40 investor calls J&J buyout

    Jan 26, 2017 | Reuters

    By John Miller
    
    
    Johnson & Johnson's $30 billion offer to buy Swiss biotech Actelion including a plan to spin out a separate research company is "very attractive", one of Actelion's 40 biggest investors said on Thursday.
15. J&J to Buy Swiss Biopharma Firm Actelion for $30 Billion (Update)

    Jan 26, 2017 | Associated Press

    Johnson & Johnson is buying Swiss biopharmaceutical company Actelion for about $30 billion, handing the U.S.-based health care products giant a chance to boost its presence in innovative biotech treatments.
16. J&J Seals $30 Billion Actelion Deal in Push for Rare Disease

    Jan 26, 2017 | Bloomberg

    By Jared S Hopkins and Naomi Kresge
    
    
    • Actelion shareholders to get $280/share in cash in deal • Drugmakers expect deal to be completed in second quarter
17. Johnson & Johnson agrees $30bn deal to buy Actelion

    Jan 26, 2017 | Irish Times

    Company to become a leader in medicines treating a rare type of high blood pressure
18. ACTELION STREET WRAP: Counterbid Unlikely, No Competition Issues

    Jan 26, 2017 | Bloomberg

    J&J agrees to launch an all-cash tender offer in Switzerland to acquire all of the outstanding shares of Actelion for $280 per share, spin off R&D unit.
19. Actelion

    Jan 26, 2017 | Jeffries

    JNJ Acquisition at CHF280; R&D NewCo Spun-off with Early-Stage Assets
20. J&J/Actelion: high pressure sale

    Jan 26, 2017 | Financial Times Lex

    Deal has the untidy look that can result from late concessions
21. J&J seals Actelion acquisition for $30bn

    Jan 26, 2017 | Pharmaphorum

    By Richard Staines
    
    
    Johnson & Johnson has confirmed it is to acquire Swiss biotech Actelion for £30 billion, after beating off competition from Sanofi to clinch its biggest ever deal.
22. Johnson & Johnson to buy Actelion for $30 billion, spin off R&D unit

    Jan 26, 2017 | Reuters

    By John Miller and John Revill
    
    
    U.S. healthcare giant Johnson & Johnson (JNJ.N) will buy Swiss biotech company Actelion (ATLN.S) in a $30 billion all-cash deal that includes spinning off Actelion's research and development pipeline, the companies said on Thursday.
23. Johnson and Johnson to Acquire Swiss Biotech Firm for $30 Billion (JNJ)

    Jan 26, 2017 | Investopedia

    By Deborah DSouza
    
    
    Johnson and Johnson (JNJ) has agreed to acquire Swiss biotech firm Actelion for $30 billion in an all-cash deal.
24. J&J finally seals $30 billion deal for Actelion

    Jan 26, 2017 | Pharmafile

    By Ben Hargreaves
    
    
    Johnson & Johnson has, as expected, wrapped up the deal to acquire Actelion in a deal worth $30 billion, working out at a deal of $280 a share. The deal excludes the R&D unit of Actelion, which will be spun out into a new publically traded company, named R&D NewCO, under the leadership of Actelion founder and CEO Jean-Paul Clozel.
25. Johnson & Johnson to buy Actelion for $30B, spin out R&D unit

    Jan 26, 2017 | The Deal

    By Martin Baccardax
    
    
    Johnson & Johnson will purchase Swiss biotech Actelion Pharmaceuticals for $30 billion and plans to spin out the company's research and development unit into a separate business.
26. Johnson & Johnson pays big for Swiss biotech firm Actelion

    Jan 26, 2017 | Euronews

    US healthcare giant Johnson & Johnson is to buy Actelion, Europe’s biggest biotech company – paying $30 billion (28 billion euros).
27. Johnson & Johnson snaps up Swiss biotech firm in $30bn deal

    Jan 26, 2017 | Silicon Republic

    By Gordon Hunt
    
    
    In an all-cash $30bn move, US healthcare company Johnson & Johnson is acquiring the Switzerland-based biotech company Actelion.
28. Johnson & Johnson's $30B takeover keeps cash overseas

    | CNNMoney

    By Alanna Petroff
    
    
    Johnson & Johnson isn't following President Trump's advice to buy American.
29. J&J agrees $30bn deal to acquire Actelion

    Jan 26, 2017 | PMLive

    By Phil Taylor
    
    
    Swiss biotech to retain control of early-stage pipeline as J&J takes minority stake in R&D spin-out
30. Johnson & Johnson's Foolishness Is on Full Display

    Jan 26, 2017 | Motley Fool

    By Sean Williams
    
    
    One of Actelion's lead drugs just stumbled in a phase 3 label expansion study. Why would J&J still go through with a buyout?
31. What You Need To Know About The JNJ Deal

    Jan 26, 2017 | Seeking Alpha

    By Jonathan Weber
    
    
    Summary • JNJ agrees to buy Actelion for $30 billion. • Using offshore cash is smart. • Acquisition will be accretive.
32. J&J Locks in Actelion Price in Dollars, Avoiding Franc Swings

    Jan 26, 2017 | Bloomberg News

    By Phil Serafino, Albertina Torsoli and Stefania Spezzati
    
    
    Johnson & Johnson is taking no chance of a nasty surprise from the currency market on its $30 billion acquisition of Actelion Ltd.
33. Johnson & Johnson to buy Swiss biotech company Actelion for $30bn

    Jan 26, 2017 | Financial Times

    By Ralph Atkins, David Crow
    
    
    Johnson & Johnson is to acquire Swiss biotechnology company Actelion for $30bn in a complex deal that will see Actelion’s founder heading a standalone spin-off research company based and listed in Switzerland.
34. Johnson & Johnson seals biggest European pharma deal in 13 years as it snaps up Actelion

    Jan 26, 2017 | The Telegraph

    By Julia Bradshaw
    
    
    Johnson & Johnson is buying blood pressure specialist Actelion in an all-cash deal that values the company at $30bn (£23.8bn), following months of complex negotiation and marking the first big pharmaceuticals transaction of the year.
35. Pharmalot, Pharmalittle: J&J pays $30 billion to buy Actelion

    Jan 26, 2017 | STAT

    By Ed Silverman
    
    
    Rise and shine, everyone, another busy day is on the way. Although not so busy for our shortest person, who is sleeping in thanks to a seasonal malady. Distractions aside, we are quaffing cups of stimulation and foraging for interesting items. Speaking of which, here is the latest crop. We hope your day goes well and would like to remind federal workers that we accept leaks — of any kind — and respect confidentiality. Have a smashing day, folks …
36. Clozel Goes Back to His Roots Following $30 Billion Sale to J&J

    Jan 26, 2017 | Bloomberg

    By Naomi Kresge, James Paton and Roxana Zega
    
    
    After pocketing $1.5 billion from selling Actelion Ltd., co-founder and Chief Executive Officer Jean-Paul Clozel gets to return to his roots with a shot at another payday. Clozel and his team will keep the riskier portions of Actelion’s pipeline after selling the rest of the Swiss biotech to Johnson & Johnson for $30 billion under the terms of a deal announced Thursday. The experimental treatments -- drugs that are yet to go through the most exacting stages of clinical tests and regulatory scrutiny -- will be spun off into a new Swiss biotech that Clozel will helm.
37. J&J Buying Actelion for $30 Billion Cash (JNJ)

    Jan 26, 2017 | Investopedia

    By Michael Kramer
    
    
    Johnson & Johnson (JNJ) announced this morning it was buying the Swiss pharmaceutical company Actelion for $30 billion in an all cash deal. The value of the deal comes to $280 per share which equates to roughly 279.50 Swiss Francs at current exchange rates of 0.9991 USD to CHF. The deal also includes spinning-off Actelion's R&D unit into a separate business.
38. Johnson & Johnson Holds on to Top Credit Ratings From Moody’s

    Jan 26, 2017 | Bloomberg

    By Dan Wilchins and Allison McNeely
    
    
    Johnson & Johnson remains a Aaa rated company even after it agreed to pay $30 billion cash for Swiss drugmaker Actelion Ltd., Moody’s Investors Service said in a statement on Thursday.
39. J&J seals $30B deal for Actelion

    Jan 26, 2017 | BioPharmaDIVE

    By Ned Pagliarulo
    
    
    Dive Brief: • Johnson & Johnson on Thursday announced it would acquire Swiss biotech Actelion for $30 billion in cash, opening up its wallet to secure Actelion's leading portfolio of treatments for pulmonary arterial hypertension (PAH). • Per deal terms, J&J will pay $280 per share for Actelion, which will spin out its drug discovery and early-stage R&D efforts into a new public Swiss company to be led by Actelion CEO Jean-Paul Clozel. • The unique agreement gives J&J a franchise of marketed drugs on track to earn nearly $2.5 billion in sales this year, immediately boosting earnings per share for the pharma giant. At the same time, spinning out Actelion's R&D efforts allows Clozel to retain leadership over a pipeline Actelion valued more than J&J.
40. Jim Cramer: 'We Do Not Want to Own Drug Stocks'

    Jan 26, 2017 | The Street

    By Giovanni Bruno
    
    
    Despite calling Johnson & Johnson's move to acquire Swiss drug maker Actelion a 'great new frontier,' Jim Cramer advised investors to proceed with caution.
41. This Drug Could be Johnson & Johnson's Next Billion-Dollar Blockbuster

    Jan 26, 2017 | BioSpace

    By Mark Terry
    
    
    While the biggest news for Johnson & Johnson (JNJ) today is probably its $30 billion acquisition of Actelion (ALIOF.PK), a tidbit revealed in its fourth-quarter earnings report should get investors’ attention as well. Todd Campbell, writing for The Motley Fool, takes a look at J&J’s Darzalex.
42. Advisers could land $100 million payday from Actelion sale

    Jan 26, 2017 | Reuters

    By Clara Denina
    
    
    Advisers could pocket up to $100 million in fees from Johnson & Johnson's $30 billion acquisition of Swiss biotech firm Actelion, the largest takeover of a European healthcare business in more than a decade.
43. Johnson & Johnson agrees to acquire Actelion Pharmaceuticals for $30 billion

    Jan 26, 2017 | Cardiovascular Business

    By Tim Casey
    
    
    Johnson & Johnson agreed to acquire Actelion Pharmaceuticals on Jan. 26 for approximately $30 billion.
44. J&J to pay $30 billion for Actelion

    Jan 26, 2017 | Chemical & Engineering News

    By Lisa M. Jarvis
    
    
    A new biotech will be created from Actelion’s research unit
45. J&J Boosts Drug Roster With $30B Actelion Deal

    Jan 26, 2017 | CFO Magazine

    By Matthew Heller
    
    
    The largest acquisition in J&J's history gives it access to Actelion's portfolio of high-margin treatments for rare diseases.
46. For J&J, $30B Actelion deal is less about synergies, more about future promise

    Jan 26, 2017 | MedCity News

    By Arundhati Parmar
    
    
    The rationale for big deals in the devices sector in the past few years has been about synergies. Think about the $49 billion mega-merger of Medtronic and Covidien. Or the combination of Biomet and Zimmer.
47. Terms Set; J&J acquiring Actelion and ownership interest in new R&D Co

    Jan 26, 2017 | Deutsche Bank

    We see the deal as a positive as it is a unique transaction structure that creates immediate value and provides potential long term upside through the ownership interest in a new, standalone R&D company. We reiterate our Buy. Before the open, J&J announced a definitive agreement to acquire Actelion (ATLN-rated Hold-CHF272) for US$280/share in an all cash tender offer, a value of $30 billion. J&J had previously confirmed it had been in exclusive talks with Actelion thus the deal was not a surprise. Actelion is CHF2.4 billion a Swiss pharma/biotech company specializing in pulmonary arterial hypertension.
48. J&J’s Actelion Buy Brings Strong Midterm Growth in Rare Diseases; High Price Lowers Fair Value

    Jan 26, 2017 | Morningstar

    Actelion has agreed to be purchased by J&J in an all-cash deal for $30 billion ($280/CHF 280 per share), far exceeding our stand-alone Actelion fair value estimate of CHF 112 per share. J&J expects this deal to improve long-term revenue growth rates by at least one percentage point and long-term earnings by 1.5-2 percentage points, which fits with our stand-alone Actelion estimates. With the deal expected to close in the second quarter, we are lowering our J&J fair value estimate from $112 to $108 due to the overpayment for the acquisition. The deal is priced at roughly 10 times our 2019 Actelion sales estimate of almost $3 billion, which seems difficult to justify without confidence that this growth is sustainable in the long run. However, beyond a weak 2017 (due to generic Tracleer launches in the U.S.), we do expect Actelion to see strong midterm growth in the 2018-20 time frame as Uptravi's launch continues. This growth will be particularly valuable to J&J as it attempts to plug the potential hole created by biosimilar Remicade, and Actelion will help J&J further guarantee the stability of its wide economic moat. We plan to raise our Actelion fair value estimate to match the deal price (assuming minimal additional value for the R&D spin-off).
49. J&J's Acquisition of Actelion Speaks to Arena's Pipeline

    Jan 26, 2017 | FBR Capital Market

    J&J acquisition of Actelion’s (ATLN-SW, Not Rated) provides validation of ARNA’s pipeline, by our analysis. ATLN’s pipeline is driven by its Pulmonary Arterial Hypertension (PAH) franchise generating revenues of $1.78B through 3Q16. J&J acquired a large portion of ATLN’s pipeline for $30B. Approximately $8B of the $30B may be attributed to competing drugs that are in ARNA’s pipeline. ATLN's PAH franchise includes Opsumit, Tracleer, and Uptravi, with sales of $596M, $790M, and $160M, respectively through 3Q16. ARNA’s oral prostacyclin receptor modulator for PAH may have an improved pharmacological profile over ATLN’s Uptravi (selexipag, recently approved). Furthermore, similar to ARNA, ATLN’s pipeline also has a selective S1P modulator for autoimmune disease. ATLN’s S1P modulator is for MS in Phase III, while ARNA’s is in Phase II for UC. ARNA’s selective S1P receptor modulator is designed to engage S1P1, S1P4, and S1P5 receptors, while avoiding S1P2 and S1P3, preventing safety issues. Note that in 2015 Celgene acquired Receptos for $7.4B largely for its selective S1P modulator, ozanimod.
50. Johnson & Johnson’s Most Exciting Opportunity

    Jan 26, 2017 | Motley Fool

    By Todd Campbell
    
    
    Johnson & Johnson's (NYSE:JNJ) fourth-quarter financials this week suggest that cancer drugs will be the biggest driver of the company's success in 2017. Can cancer drug sales continue to soar? Here's why cancer drugs could be Johnson & Johnson's most exciting opportunity in 2017.
51. Johnson & Johnson: Fair Is Fair

    Jan 26, 2017 | Seeking Alpha

    Johnson & Johnson is the principle example of a blue chip stock, with a strong dividend policy and stable business.
52. J&J-Actelion Deal Validates Arena’s Pipeline: FBR

    Jan 26, 2017 | Bloomberg First Word

    About $8b of JNJ’s $30b takeover of Actelion may be attributed to rival drugs in Arena Pharma pipeline, FBR analyst Rahul Jasuja (Outperform, PT $6) wrote in a note.
53. J&J boss’s long quest ends with $30bn Actelion deal

    Jan 26, 2017 | Financial Times

    By David Crow
    
    
    Johnson & Johnson’s $30bn acquisition of Actelion, the Swiss biotech group, caps a years-long quest to find a deal of sufficient size to boost flagging growth at the world’s largest healthcare company.
54. Mergers help boost European shares; Johnson & Johnson’s $30bn deal to purchase Swiss firm Actelion lifts shares (Excerpt)

    Jan 27, 2017 | Irish Times

    By Charlie Taylor
    
    
    European shares held around one-year highs yesterday, supported by mergers and acquisitions-related optimism, with Johnson & Johnson's $30 billion deal to buy Actelion lifting shares in the Swiss biotech firm
55. Johnson & Johnson strikes $30bn deal

    Jan 27, 2017 | Irish Examiner

    By John Miller and Paul Arnold
    
    
    US healthcare giant Johnson & Johnson (J&J) has reached agreement to buy Swiss biotech company Actelion in a $30bn (€28bn) all-cash deal that includes spinning off Actelion’s research and development pipeline, the companies said yesterday.
56. Johnson&Johnson swallows Actelion's medicine for $30bn

    Jan 27, 2017 | The Times

    By Alex Ralph
    
    
    The world's largest healthcare company has struck a $30 billion deal to buy one of Europe's most coveted biotech companies after weeks of complex negotiations.
57. Hedge Funds Track J&J Private Jet for an Edge on Actelion Score

    Jan 27, 2017 | Bloomberg

    By Dinesh Nair, Nishant Kumar, Manuel Baigorri
    
    
    Burned by failed deals, poor returns and client withdrawals, hedge fund managers needed a home run.
58. J&J-Actelion Deal Validates Arena’s Pipeline: FBR

    Jan 26, 2017 | Bloomberg First Word

    About $8b of JNJ’s $30b takeover of Actelion may be attributed to rival drugs in Arena Pharma pipeline, FBR analyst Rahul Jasuja (Outperform, PT $6) wrote in a note.
59. For J&J, $30B Actelion deal is less about synergies, more about future promise

    Jan 26, 2017 | MedCity News

    By Arundhati Parmar
    
    
    The rationale for big deals in the devices sector in the past few years has been about synergies. Think about the $49 billion mega-merger of Medtronic and Covidien. Or the combination of Biomet and Zimmer.

Television Coverage

60. Bloomberg Daybreak: Americas

    | Bloomberg TV

    Fox Business News Mornings With Maria Bartiromo 26 January 2017 http://app.criticalmention.com/app/#/clip/public/b0bd7fd1-0e33-4b1f-be58-d753b0fbd855
61. Mornings With Maria Bartiromo

    | Fox Business News

    Fox Business News Mornings With Maria Bartiromo 26 January 2017 http://app.criticalmention.com/app/#/clip/public/6f1984a3-cc97-4589-b46c-e5f90fb56ff3
62. Squawk Box

    Jan 26, 2017 | CNBC

    CNBC Squawk Box 26 January 2017 http://app.criticalmention.com/app/#/clip/public/fff0a15a-cc04-46fd-98be-f47cb03dfb71
63. Bloomberg Markets: Americas

    Jan 26, 2017 | Bloomberg

    Bloomberg Markets: Americas Bloomberg January 26, 2017 View Clip Here: http://app.criticalmention.com/app/#clip/view/25840049?token=d080d06d-9780-47e9-8f09-8e839059b47d

Full Text of Stories Below

Traditional Coverage

1. J&J finally grabs Actelion's marketed meds for $30B, with R&D spinoff to come

   Jan 26, 2017 | FiercePharma

   By Carly Helfand

   Johnson & Johnson will pay $30 billion to gain Actelion's marketed meds, which brought in $1.8 billion in the first nine months of 2016.

    It took months, but growth-starved Johnson & Johnson and longtime solo flyer Actelion finally have a deal agreement that’ll make both parties happy.

    The details: The New Jersey pharma giant will fork over $30 billion—$280 per Actelion share—in cash to swallow the Swiss biotech’s portfolio of marketed meds, which includes pulmonary arterial hypertension up-and-comers Opsumit and Uptravi. Actelion brought in 1.8 billion Swiss francs (about $1.8 billion) in the first nine months of 2016, so the deal will give J&J an immediate revenue boost—one large enough to swell sales growth at least 1% beyond Wall Street’s current estimates, the company said

    Meanwhile, Actelion will spin out its R&D unit into a standalone company, basing and listing the new drugmaker in Switzerland and handing J&J a hefty minority stake.

    J&J has thus scored the sort of deal that many Big Pharma companies crave these days. Major drugmakers have shown they'll pay up for a company that combines marketed meds and their instant sales boost with pipeline prospects that can deliver more revenue down the road. Pfizer paid a rich $14 billion for the cancer-focused biotech Medivation last year after a bidding war that drew in Big Pharma and Big Biotech.

    In Actelion's case, Sanofi jumped into the fray in hopes of a deal, but J&J elbowed the French drugmaker aside to enter exclusive deal talks in December. Those talks yielded the combination sale-and-spinoff structure, in which Actelion's longtime CEO Jean-Paul Clozel will helm his company's pipeline efforts going forward and which gives J&J that immediate sales hike.

    The pair plans to close the transaction by this year’s second quarter, and once it does, J&J expects to add 35 to 40 cents to 2017 EPS. That’ll be a welcome change, considering the disappointing sales performance and flat expansion rate some of the company’s key meds put forth in Q4.

    The agreement ends several months of back-and-forth between the two drugmakers, which included J&J at one point walking away. That's when Actelion struck up talks with Sanofi. But the way Actelion chairman Jean-Pierre Garnier sees it, the relatively complex deal arrangement was worth the wait.

    “When a Big Pharma buys a smaller company, very often there’s also destruction of value. ... They don’t have the same culture, they don’t have the same processes," Garnier said on a Thursday conference call. "There’s always this dark side to the transaction. Today, we have found the structure that pretty much avoids these dark sides.”

    “I do believe today that R&D NewCo will be a very successful company,” Clozel—who will run the new spinoff—added on the call.

    J&J, of course, will benefit from that company’s success, too. It’ll initially hold 16% of shares, and it’ll have rights to another 16% through a convertible note. J&J will also pick up an option on phase 2 hypertension prospect ACT-132577.

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2. J&J CEO Says Co. Will Continue to Look For M&A Opportunities

   Jan 26, 2017 | Bloomberg

   JNJ sees after-tax charges of $500m-$600m in 2017, and expects credit agencies to reaffirm AAA ratings after the Actelion transaction, management says on conference call. Co. said the deal calls for holding at least two year-interest in new company.

   Earlier, JNJ said M&A will be contributing "half of growth" in the foreseeable future Joaquin Duato, chairman for pharmaceuticals, says synergies will play a "small role" in this deal ATLN CEO Jean-Paul Clozel says the cos. aiming to complete the transaction around June

   JNJ shares give up earlier pre-market gain, falls less than 1%

   NOTE: Earlier, Actelion R&D NewCo May Be Worth CHF7.62 Per Share, Survey Shows ACTELION STREET WRAP: Counterbid Unlikely, No Competition Issues M&A

   TEARSHEET: J&J to Buy Actelion for $30b, Spin Off R&D Unit Actelion Adds a Little Sun to J&J’s Cloudy Horizon: Bloomberg Intelligence

    

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3. Actelion R&D NewCo May Be Worth CHF7.62 Per Share, Survey Shows

   Jan 26, 2017 | Bloomberg

   The research and development unit which is expected to be spun off to Actelion shareholders as part of the J&J takeover is estimated to be worth CHF7.62/share, according to a Bloomberg survey. Survey Breakdown: Range CHF4 to CHF12.50 (mean CHF7.62, median CHF7.25) Respondents were asked what price per share they would attribute to the spin off Survey respondents comprised a total of 20 M&A/event driven desks, equity analysts, fund managers

    R&D NewCo. Process: Before merger completion, Actelion will spin out its drug discovery operations and early-stage clinical development assets into a new co. with CHF1b of cash Actelion shareholders are to receive one share of the R&D NewCo as stock dividend J&J will initially hold 16% of shares of R&D NewCo, have rights to additional 16% of R&D NewCo equity via a convertible R&D NewCo will be focused across four therapeutic franchises: specialty cardiovascular disorders, central nervous system disorders, immunological disorders and orphan diseases J&J to receive an option on ACT-132577, one of the R&D NewCo drugs being developed for resistant hypertension, currently in phase 2 clinical development

   Tax clearances in relation to spin-off of R&D NewCo have been received from Swiss Federal and Basel-Landschaft cantonal tax authorities
   

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4. BAML and Lazard lead Johnson & Johnson's Actelion takeover; $30bn biotech acquisition is the largest deal announced so far this year

   Jan 26, 2017 | Financial News

   By Tim Burke

   Bank of America Merrill Lynch and Lazard have emerged with lead advisory roles on the largest takeover announced so far in 2017.

    US healthcare group Johnson & Johnson has agreed a $30 billion acquisition of Actelion, a Swiss biotech business, according to a joint statement from the companies on January 26.

    The deal will see Actelion spin out its research and development business as a standalone company listed on the Swiss stock exchange.

    Lazard is lead financial adviser to Johnson & Johnson, according to the statement, with Citigroup also providing financial advice. Bank of America Merrill Lynch is lead financial adviser to Actelion, with Credit Suisse also advising the company.

    Lazard's team was led by David Gluckman, the firm's New York-based global co-head of healthcare, a person familiar with the deal said. Gluckman was assisted by Rolf Bachmann, head of Swiss investment banking, and UK healthcare head Dale Raine, who joined the firm in 2016 and was named an FN rising star in investment banking.

    Citi's bankers on the deal include Chris Hite, its global head of healthcare investment banking, and Wilhelm Schulz, head of M&A for Europe, the Middle East and Africa, according to another person familiar with the deal.

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5. Johnson & Johnson Buys Actelion For $30 Billion

   Jan 26, 2017 | The Street

   By Edward Hardy

   Johnson & Johnson plans to spin out Actelion's R&D unit into a separate business

    Johnson & Johnson (JNJ) has finalised a deal to purchase Actelion (ALIOF) for $30 billion. The agreement means that the American pharmaceutical company will pay $280 per share for the Swiss biotech. The deal was unanimously approved by both boards.

    The company has announced that it plans to spin out Actelion's R&D unit into a separate business.

    Actelion shares have risen over 50% since speculation about the takeover began in November.

    "We believe this transaction offers compelling value to both Johnson & Johnson and Actelion," said Johnson & Johnson CEO Alex Gorsky.

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6. Charitable Act

   Jan 26, 2017 | Reuters Breakingviews

   By George Hav

   Johnson & Johnson has given Actelion investors a way around a classic M&A dilemma. Usually, shareholder delight at being offered a generous price entirely in cash is tempered by concern at missing out on future upside. The U.S. giant’s $30 billion bid lets them have both.

    The $280-a-share offer values the Swiss group at 72 percent more than it was worth in late November, when news of J&J’s interest first leaked out. The Thomson Reuters index of European pharma groups is up 6 percent over the same period. The bid values Actelion at 30 times its expected 2017 EBITDA: J&J trades on a multiple of less than 11, while European peers are valued at around 12 times.

    J&J’s largesse reflects the $307 billion company’s need for new tricks – in this case, Actelion’s specialism in treating life-threatening high blood pressure in arteries between the heart and lungs. Drugmakers’ ability to strike gold via lucrative patented products has prompted eye-popping prices before: in August Pfizer paid a 120 percent premium to secure Medivation’s cancer expertise.

    However, J&J will not have full control of any new potential blockbusters. Just before the deal is completed, Actelion will spin out a new company containing so-called “phase 2” drugs in development. The Swiss company’s shareholders will own a majority stake in the business, which will start out with about 1 billion Swiss francs in cash. J&J, which according to a person familiar with the situation is putting up about half that cash, will have a 16 percent shareholding, with an option over a stake of the same size.

    The spinoff is small when compared with the overall deal. One analyst estimates that Actelion’s five key drugs at phase 2 stage are each worth an extra 2 Swiss francs per share. However, it’s hard to see how J&J can generate a return that matches its target’s cost of capital, which is probably around 10 percent. Jefferies estimates that Actelion will generate revenue of 3.7 billion Swiss francs by 2020. Apply a 14 percent tax rate and J&J’s return is around 5 percent, according to Breakingviews calculations. Shifting nearly 600 million Swiss francs of annual R&D costs to the new entity lifts this to 7 percent.

    For J&J, that may be a preferable way to deploy its offshore cash reserves. Actelion shareholders, meanwhile, get to have their cake and eat it.

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7. Johnson & Johnson to Acquire Actelion in $30 Billion Deal (Update 2)

   Jan 26, 2017 | Wall Street Journal

   By Brian Blackstone and Denise Roland

   Deal gives U.S. pharma giant access to Swiss firm’s rare-disease portfolio amid competition pressures

    Johnson & Johnson has agreed to acquire Actelion Ltd. for $30 billion, in an unusual deal that will also spin out the Swiss biotech company’s drug-discovery operations.

    The deal, the largest in J&J’s history and announced by both companies Thursday, ends weeks of seesaw negotiations. J&J initially abandoned talks, only to resume them about a week later after the companies entered into exclusive negotiations.

    Its peculiar structure, in carving out early-stage research, addresses Chief Executive Jean-Paul Clozel’s longstanding resistance to selling the business over concerns that an acquisition would destroy the company’s drug-discovery engine.

    At the same time, it gives J&J a clutch of promising new drugs that will bolster its portfolio of rare-disease treatments as its top-selling drug faces new competition.

    The new drugs would immediately and significantly add to J&J sales, while giving the company access to promising candidates for multiple sclerosis and hypertension, Chief Executive Alex Gorsky said in an interview.

    More generally, the deal underscores the hefty price big pharmaceutical companies can face to replenish their drug pipelines as their top sellers lose patent protection and face competition from less-expensive copy drugs.

    Shares in Actelion surged as high as 277 Swiss francs ($277) following the announcement, or nearly 22%, while J&J shares slipped 0.8% in morning trade in New York.

    J&J is paying $280 a share in cash for Actelion, retaining the company’s commercially available treatments for rare diseases such as an artery disorder known as pulmonary arterial hypertension, plus a handful of drugs in late-stage development.

    Actelion will spin off its drug-discovery operations into a separate company, and J&J initially will hold 16% of the shares of the new company with an option to acquire another 16%. Dr. Clozel, 61 years old, will lead the new company and will pocket around $1.5 billion from the deal through his 5% stake in Actelion.

    The spinoff could be “the Genentech of J&J,” Actelion Chairman Jean-Pierre Garnier said, referring to the biotech company that developed several new drugs while partnered with Roche Holding AG, which later bought it.

    The Actelion-J&J spinoff echoes Actelion’s own roots: The biotech firm was spun out of Roche 20 years ago by a group of scientists there, including Dr. Clozel, a cardiologist, and his wife, Dr. Martine Clozel, a pediatrician, after the Swiss pharmaceutical giant decided against pursuing their research.

    Actelion, Europe’s biggest biotech firm by sales and market capitalization, started out with two drugs that had been developed inside Roche, one of which went on to become blockbuster pulmonary arterial hypertension drug Tracleer.

    It went on to develop two follow-on PAH drugs, Opsumit and Uptravi, though the early-stage research efforts that will make up the spun-off entity are more diverse, spanning conditions including lupus and insomnia.

    Sales of Actelion’s drugs have been growing 20% a year in recent years, said Mr. Garnier. J&J hopes to accelerate that growth by taking advantage of the company’s global reach, Mr. Gorsky said.

    “If you have blockbuster drugs in a rare disease area that’s shown to be more immune to pricing pressure, that is a very valuable asset to have,” said Jefferies analyst Peter Welford. He said that while the deal valuation was above average, it was still reasonable.

    “It’s a win-win,” he said. “[Dr. Clozel] sold a company for $30 billion, which shows they have created substantial value. At the same time he and his employees get to keep the bit they’re passionate about: the R&D.”

    The spun-off entity is likely to fetch a market valuation of 1 billion to 1.5 billion Swiss francs as a stand-alone company, he added.

     The deal comes as J&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 Inc.’s copy drug, Inflectra. J&J has said 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.

    For the first nine months of last year, Actelion reported net profit of 581 million Swiss francs on revenue of 1.79 billion Swiss francs.

    J&J first sat down with the company in August in New York, Mr. Gorsky said. The negotiations picked up in November, the same month that the companies first disclosed they were in talks over a possible deal.

    The next month, J&J said it had bowed out of the talks, while Actelion said it had “engaged in discussions with another party” that The Wall Street Journal reported to be French drug company Sanofi SA. That effort came after Paris-based Sanofi lost out to Pfizer in a bidding war for cancer biotech Medivation Inc.

    Maintaining the independence of Actelion’s drug-discovery operation was essential to clinching the deal, said Mr. Garnier, who added that the company had brushed aside potential deals in the past.

    Actelion “didn’t want to sell the company at all,” Mr. Garnier said in an interview with The Wall Street Journal, while J&J initially balked at carving out the R&D of Actelion. “They didn’t love it at first sight. It took a few dates. But eventually they” understood and agreed to the setup.

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8. Johnson & Johnson to snap up Swiss biotech company Actelion for $30bn

   Jan 26, 2017 | City A.M.

   By Shruti Tripathi Chopra

   Johnson & Johnson (J&J) is snapping up Europe's biggest biotech company Actelion in a $30bn (£23.7bn) deal.

    J&J, which is the world's biggest healthcare group, is also funding a new research and development company headed by chief executive and founder Jean-Paul Clozel.

    Actelion will spin out its drug discovery operations and early-stage clinical development assets into a newly created biopharmaceutical company that will be listed in Switzerland.

    J&J is paying $280 a share in cash for the biotech giant

    According to Reuters, the new Swiss-listed public company being created will be capitalised with one billion Swiss francs ($790m). J&J will own 16 per cent and hold rights to another 16 percent while Actelion shareholders will get one share in the new company for every Actelion share.

    The deal gives J&J access to Actelion's range of rare-disease drugs including one to treat pulmonary arterial hypertension.

    “We believe this transaction offers compelling value to both Johnson & Johnson and Actelion shareholders,” said Alex Gorsky, chairman and chief executive officer of Johnson & Johnson. “Actelion has built an attractive, growing business with world-class commercial and clinical development capabilities. Adding Actelion’s portfolio to our already strong Janssen Pharmaceuticals business is a unique opportunity for us to expand our portfolio with leading, differentiated in-market medicines and promising late-stage products."

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9. Johnson & Johnson Bolsters Drug Roster With $30 Billion Actelion Deal (Update)

   Jan 26, 2017 | New York Times

   By Chad Bray

   Johnson & Johnson, the world’s largest health care company, has moved to bolster its roster of treatments for rare diseases, announcing a $30 billion deal on Thursday to acquire Actelion, a Swiss biotechnology firm.

    After months of stop-start negotiations — Johnson & Johnson walked away from discussions in mid-December, only for the companies to restart exclusive talks about a deal a few days later — the deal would add Actelion’s treatments for pulmonary arterial hypertension, or high blood pressure in the lungs, to the American giant’s stable.

    As part of the deal, Actelion would spin off its drug discovery operations and early-stage clinical development assets into a new Swiss biopharmaceutical company, which would be listed in Switzerland.

    “We believe this transaction offers compelling value to both Johnson & Johnson and Actelion shareholders,” Alex Gorsky, the chairman and chief executive of Johnson & Johnson, said in a news release. The deal allows the company to expand its portfolio with leading medicines and promising late-stage products, he added.

    Johnson & Johnson, based in New Brunswick, N.J., said that it would pay $280 a share in cash for Actelion, equating to 280.08 Swiss francs per share. Actelion’s shares closed Friday at 227.40 francs. Johnson & Johnson would pay for the transaction with cash it holds outside the United States.

    The deal was unanimously approved by the boards of both companies and is expected to close by the end of the second quarter.

    It is conditioned on Actelion shareholders agreeing to the spinoff and to sell at least 67 percent of their shares to Johnson & Johnson. The acquisition is also subject to regulatory approval.

    Johnson & Johnson would initially own 16 percent of the new research and development company, with the right to acquire an additional 16 percent. Actelion shareholders would also receive shares in the new company.

    Jean-Paul Clozel, the Actelion chief executive, would serve as the spinoff’s chief executive, and Jean-Pierre Garnier, Actelion’s chairman, would be its chairman.

    Lazard, Citigroup and the law firms Cravath, Swaine & Moore; Homburger; and Sexton Riley are advising Johnson & Johnson, while Bank of America Merrill Lynch, Credit Suisse and the law firms Niederer Kraft & Frey; Wachtell, Lipton, Rosen & Katz; and Slaughter and May are advising Actelion.

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10. BRIEF-Jupiter says J&J purchase of Actelion

    Jan 26, 2017 | Reuters

    Jupiter Fund Manager Mike Buhl-nielsen: Johnson & Johnson purchase of actelion is "very good outcome", says can see "clear synergies for j&j"

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11. Sanofi's search for a growth engine continues after J&J secures Actelion

    Jan 26, 2017 | The Deal

    Sanofi SA' CEO Olivier Brandicourt must be tiring of losing biotech targets to American rivals.

    France's biggest drugs maker on Thursday missed out on a second multibillion acquisition in less than a year when Johnson & Johnson announced it had agreed a $30 billion deal for Switzerland's Actelion Pharmaceuticals Ltd.

    In August, Brandicourt failed with a hostile offer for San Francisco-biotech Medivation Inc. when Pfizer Inc. stepped in with a $14 billion deal.

    The twin false starts can be viewed both positively and negatively.

    The glass half full interpretation is that Brandicourt remains admirably disciplined, unwilling to risk value destruction by overpaying for niche, and potentially risky, drug makers.

    J&J's agreed offer of $280 per Actelion share is more than 80% over the target's share price before rumors of a bid emerged in November last year and 14% more than J&J initial valuation of $248 per share. The deal also includes a plan to spin off Actelion's R&D unit, which will depart with about $1 billion of Actelion's cash, its highly successful CEO Jean-Paul Clozel, and assets that analysts at London-based broker Jefferies said could be worth between $5 and $10 dollars a share. J&J will hold 16% of the spin-off and an option to double that stake, but its potential to benefit from Actelion's pipeline of more than 15 early stage drugs will remain diluted.

    The deal values Actelion at about 13 times current year sales, making it a bet on Actelion's continued rapid sales growth. Biotech acquisitions over 2015-16 were typically price in the range of 3.3 times to 5.5 times 2020 forecast sales, according to a recent Goldman Sachs note.       

     The risks to those growth assumptions were made clear this week when Actelion said its potential blockbuster drug Opsumit had failed a key late-stage trial, throwing into doubt plans to expand applications for drug that is currently approved to treat a rare form of pulmonary arterial hypertension.

    Those sort of risks likely proved a deal breaker for Sanofi, which had been widely reported to be willing to pay about $30 billion for Actelion but had attempted to limit potential downside asking for a contingent value rights clause. CVR's link payments to the future performance of pipeline drugs.

    On the negative side of the ledger, the failure to real in Actelion means that Brandicourt will come under renewed pressure to find an alternative growth prospect to offset his company's dwindling sales, particularly amongst its key diabetes treatments.

    While Sanofi insisted that the wildly reported talks with Actelion were "market rumors" there seems no doubt it was the rival to J&J that Actelion said it was talking to. Brandicourt said last year that he was looking for acquisition and was ready to "act rather swiftly."

    The need for Sanofi to secure new blockbusters was highlighted earlier this month by analysts at Exane BNP, who described its pipeline of new drugs as "lacking sparkle" and noted that it had no potential blockbuster drugs, or "stars", due for release in 2017.

    Sanofi's earnings are likely to grow by an anaemic 3% to 4% over the next four years based on its in-house drug portfolio. That is a rate that will test investors patience and ensure that pressure to find a new motor for growth remains.

    With Actelion off the table, that search continues.

    Sanofi shares traded Thursday at €75.36 ($80.75), up €1.10 or 1.5% on its Wednesday close. Actelion was up just under 20% to Sfr272.50 ($275.60), while J&J climbed in pre-market trading to $114, up $1.2 or just over 1%.

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12. J&J Pays Up for Scarcity With $30 Billion Actelion Deal

    Jan 26, 2017 | Bloomberg Gadfly

    By Chris Hughes

    Some entrepreneurs get rich because they want to make money, others as a result of pursuing their interest. For Bill Gates, it was software. For Jean-Paul Clozel, it is science.

     J&J is paying $30 billion

     The founder of Actelion Ltd. and his board agreed on  Thursday to sell the Swiss pharmaceuticals group to Johnson &

    Johnson for $30 billion. It's a deal that will give him and his  shareholders a jaw-dropping return -- and enable him to carry on

    his lab work.

     For Clozel, it's a fantastic outcome. For J&J, the payback  will be much more distant.

     J&J is paying 77 percent more than Actelion's share price  before takeover talks emerged in November and 23 percent more

    than yesterday's closing price.

     For this, it will get Actelion's pulmonary hypertension  franchise -- a group of drugs that makes the heart's job a bit

    easier by alleviating blood pressure in the lungs. Sales of  these are expected to increase to $3.4 billion in 2020 from

    about $2.4 billion this year.

     Most of Actelion's early-stage R&D is excluded from the  acquisition. It will be moved into a re-born Actelion biotech, run by Clozel. J&J is buying an initial 16 percent stake in this  business.

     This two-part transaction allows J&J to save costs from day one.

     Actelion spends about 500 million Swiss francs ($500 million) annually on R&D. Most of this -- say, 300 million francs – will now be the burden of the new biotech. Kepler Cheuvreux analysts reckon J&J could cut about 140 million francs annually in other costs. In total, that's a saving of nearly a third of Actelion's current expenses.

     These efficiencies could lift the acquired business's operating profit from an estimated 1.6 billion Swiss francs in 2020 to 2.1 billion francs.

     Even with Actelion's low Swiss tax rate, J&J's return on investment would still only be 6 percent. To exceed Actelion's 9

    percent cost of capital, the purchaser will need more cost cuts, more patience or, indeed, more patients (some analysts believe pulmonary hypertension is under-diagnosed).

     J&J is being equally generous in funding Clozel's new biotech. This will have 1 billion francs of cash. Actelion has an estimated 617 million francs right now, implying J&J is providing the balance in return for its stake.

     If the biotech burns through about 300 million francs annually, it will need more funding -- perhaps from J&J -- in about three years.

     Given that analysts ascribe little value to the biotech's pipeline, it could be a struggle for the business to attract a valuation that's higher than its net cash position -- even if J&J's cash infusion implies a much higher valuation.

     Scarcity value and the threat that France's Sanofi would bid forced the U.S. giant to pay up.

     J&J didn't have to buy it. Its estimated $19 billion of net cash could have bought spent on a clutch of smaller biotechs, or

    been returned to shareholders. Instead, it has prioritized acquiring certain near-term sales. It is Clozel who has got the

    better side of this deal by some margin.

     This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

     

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13. Medical couple and butcher's boy win big from Actelion sale

    Jan 26, 2017 | Reuters

    By John Miller

    * Clozels and investor Maag each stand to gain around $1.5 bln

     * U.S. hedge fund manager Dan Och another big winner

     * Husband-and-wife team win "very attractive" deal from J&J

     The 70-year-old son of a Swiss butcher is among the biggest beneficiaries of Johnson & Johnson's $30 billion takeover of Actelion, Europe's biggest biotech company.

     For Rudolf Maag, whose 5.1 percent Actelion stake is worth more than $1.5 billion, this is the second time in five years that deep-pocketed J&J's craving for Swiss medical companies has made him rich.

     Back in 2012, the U.S. healthcare giant bought Maag's 15 percent stake in device maker Synthes Stratec in a takeover, making him a billionaire.

     The biggest European pharma deal in 13 years will also enrich Actelion Chief Executive Jean-Paul Clozel and his wife, Martine, the doctors who founded the company in 1997 and owned 5.03 percent of shares, according to the 2015 annual report.

     Other winners include BlackRock, which according to a SIX Swiss Exchange filing from December owns 5.2 percent of Actelion, and billionaire U.S. hedge fund manager Dan Och, whose Och-Ziff Capital Management Group amassed nearly 3.2 percent now worth nearly $1 billion in a stake announced before Christmas.

     European biotechnology has long been a poor relation to the far bigger industry in the United States, but the Clozels broke the mould in developing a fully fledged and profitable business.

     At Actelion they built molecules they first worked on while employees at Swiss drug giant Roche into what became the blockbuster Tracleer for treating deadly pulmonary arterial hypertension (PAH).

     With the announcement of J&J's takeover after more than two months of negotiations, other owners of Actelion are cheering, too.

     "The structure is very attractive," said Eleanor Taylor Jolidon, a fund manager at Union Bancaire Privee in Geneva, a top-40 Actelion investor.

     The relative weakness of Europe's biotechnology sector, despite the region's strong academic science base, has been blamed on factors such as lack of entrepreneurial spirit and inadequate funding.

     Under the Clozels' leadership, Actelion overcome those obstacles, with the husband-and-wife team's stubborn determination to market on their own Tracleer and follow-on drugs Opsumit and Uptravi, expected to generate more than $4 billion in combined annual revenue.

     Clozel will remain in the biotech game as CEO of the new R&D business that is being spun out of Actelion under the deal. The new company will be listed and is likely to be valued at around 1-2 billion Swiss francs ($1-2 billion), according to analysts at Berenberg.

     Its operation will include experimental drugs from Actelion's laboratories against a range of conditions, including insomnia, severe hypertension and dangerous narrowing of blood vessels associated with brain haemorrhage.

     J&J, which will control up to 32 percent of the new company along with Actelion investors who get a share for each Actelion share, also gets Tracleer, Opsumit, Uptravi and other drugs already on the market, plus rights to an experimental multiple sclerosis drug and an investigational antibiotic.

     As CEO, the 61-year-old Jean-Paul Clozel has insisted in the past on the company's independence, fending off a hostile approach in 2011 from U.S.-based activist fund Elliott Advisers which sought to wrest control of the board in order to put Actelion up for sale.

     At the time, Maag departed from his traditionally low-profile approach by publicly coming to Clozel's aid, joining those who thought Elliott was low-balling Actelion's value and defending the company's stand-alone strategy.

     When the familiar face of J&J, with its lucrative offer, arrived on the scene, however, there was no repeat of the defence.

     In an email to Reuters in December, Maag declined comment on Actelion's future and he did not respond to inquiries on Thursday seeking comment on the J&J deal.

     While Maag was a longtime investor, billionaire Och's big Actelion stake emerged in December as talk of a sale heated up and a flurry of hedge funds piled into Actelion shares on optimism that J&J's offer would be too big for the Clozels to refuse.

     "If I can get a premium, I like to take it," said Urs Beck, fund manager at EFG Asset Management. "It's a huge deal."

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14. Actelion top-40 investor calls J&J buyout

    Jan 26, 2017 | Reuters

    By John Miller

    Johnson & Johnson's $30 billion offer to buy Swiss biotech Actelion including a plan to spin out a separate research company is "very attractive", one of Actelion's 40 biggest investors said on Thursday.

     "The structure is very attractive," said Eleanor Taylor Jolidon, a fund manager at Union Bancaire Privee in Geneva, which owned 0.23 percent of Actelion shares as of Nov. 30, 2016, according to Reuters data, making it the 34th-largest shareholder.

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15. J&J to Buy Swiss Biopharma Firm Actelion for $30 Billion (Update)

    Jan 26, 2017 | Associated Press

    Johnson & Johnson is buying Swiss biopharmaceutical company Actelion for about $30 billion, handing the U.S.-based health care products giant a chance to boost its presence in innovative biotech treatments.

     Under the deal announced Thursday, the New Jersey-based maker of Band-Aids and prescription drugs says it will boost its portfolio of medicines and late-stage products in a complementary fit with Actelion's area of expertise.

     The hard-wrought agreement after earlier failed talks comes as J&J has been picking its shots for acquisitions in recent months, and is by far the largest in a string of deals it has concluded in that span.

     Under the arrangement, Actelion's research and development unit is to be spun off into a Swiss-based stand-alone company. J&J will own 16 percent of the spun-off R&D firm and have rights to an additional 16 percent.

     Following the announcement of the all-cash offer of $280 per share, shares of Actelion Ltd. jumped around 20 percent to 273.10 Swiss francs Zurich trading. J&J said funding will come from its holdings outside the United States.

     The deal, approved unanimously by both companies' boards, is to be completed in the second quarter, pending regulatory approvals, and J&J said it expects the deal to immediately boost revenues and earnings per share.

     The companies have been trying to come to terms for at least two months, with J&J announcing talks in November that were ended in mid-December before being revived only a week later.

     The deal comes just two days after J&J announced fourth-quarter profits that narrowly surpassed analysts' expectations, while giving Wall Street a softer-than-expected 2017 earnings forecast.

     J&J said then that revenues had been helped in part by acquisitions. The New Brunswick, N.J.-based company made several deals in 2016, including a $3.3-billion purchase of hair and personal products maker Vogue International LLC.

     In September, J&J — one of the 30 stocks that make up the Dow Jones Industrial Average — also announced a deal to buy the medical optics division of Abbott Laboratories, for $4.3 billion in cash.

     J&J shares closed at $112.80, up $1.04, in New York Stock Exchange trading on Wednesday.

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16. J&J Seals $30 Billion Actelion Deal in Push for Rare Disease

    Jan 26, 2017 | Bloomberg

    By Jared S Hopkins and Naomi Kresge

    ·       Actelion shareholders to get $280/share in cash in deal

    ·       Drugmakers expect deal to be completed in second quarter

     Johnson & Johnson agreed to buy Actelion Ltd. for $30 billion and spin off the Swiss drugmaker’s research and development operations, clinching its largest deal ever to become a leader in medicines for a rare type of high blood pressure.

     J&J, already the world’s biggest maker of health-care products, is fulfilling its goal of gaining a new drug category with the transaction and dealing a blow to France’s Sanofi, which had also courted Actelion. The deal is expensive compared to recent industry takeovers such as Pfizer Inc.’s acquisition of Medivation Inc. and AbbVie Inc.’s purchase of Pharmacyclics Inc., according to an analysis from Bloomberg Intelligence.

     The agreement caps two months of stuttering negotiations to find a deal structure palatable to Jean-Paul and Martine Clozel, Actelion’s founders. The discussions were interrupted for several days after New Brunswick, New Jersey-based J&J walked away on Dec. 13, only to return to the negotiating table about a week later, interrupting talks Clozel had started holding with France’s Sanofi.

     J&J will begin a tender offer to buy shares of Allschwil, Switzerland-based Actelion for $280 each in cash, the companies said in a statement. The price, which equals 280.08 Swiss francs, is 23 percent above Wednesday’s closing level. The research and development operations will be spun off to Actelion shareholders as a new publicly traded company with 1 billion francs of cash. J&J will keep a 16 percent stake in the new company.

     Shares Rally

     J&J is paying more than 21 times Actelion’s estimated 2020 earnings per share, more than double what AbbVie spent on its cancer biotech, which “shows how hard it is to find an asset that actually makes a difference in your earnings,” said Sam Fazeli, an analyst for Bloomberg Intelligence in London.

     Access to Actelion’s drugs Tracleer, Opsumit and Uptravi, which all treat life-threatening pulmonary arterial hypertension, will make J&J a leader in treating the disease and help it expand beyond autoimmune, heart and cancer drugs.

     The new deal will immediately start adding to J&J’s earnings when the transaction in completed by the end of the second quarter, the companies said. The U.S. behemoth expects the transaction to boost its long-term profit growth by as much as 2 percent over analysts’ expectations.

     Actelion shares surged as much as 22 percent in Zurich. They were up 21 percent to 274.20 francs at 10:17 a.m., after having climbed 68 percent since early November. J&J ended Wednesday at $112.80 in New York, capping a 11.5 percent increase in the past year.

     New Company

     Meanwhile, Sanofi is left empty-handed for the second time after losing out on cancer treatment maker Medivation to another U.S. giant, Pfizer, in August.

     The Clozels and a team of scientists who split from Roche Holding AG founded Actelion about 20 years ago. The discovery of the blockbuster Tracleer propelled it over a decade ago to becoming a leader in the treatment of pulmonary arterial hypertension. Uptravi and Opsumit followed and are set to replace Tracleer, which has lost patent protection and faces challenges from copycat drugs.

     Clozel, who is Actelion’s chief executive officer and among its largest shareholders, had said in the past he wanted the company to remain independent. The CEO is a believer in Actelion’s pipeline of experimental medicines, and he and his wife have resisted takeover bids over the years.

     Clozel’s Role

     Clozel will now lead the new R&D company as CEO, while Actelion Chairman Jean Pierre Garnier heads the board. Shares in the business, which will be listed on the Six Swiss exchange, will be distributed to shareholders as a dividend. As part of the deal, J&J will have rights to an additional 16 percent of the business through a convertible note, as well as an option on ACT-132577, a product being developed for resistant hypertension.

     The new company’s cash and more advanced drugs in development could be worth about 14 to 20 Swiss francs a share, based on back of the envelope calculation, said Peter Welford, an analyst at Jefferies LLC in London.

     Before walking away, J&J had made Actelion an offer that it later increased to about $260 a share, people familiar with the situation have said, valuing the Swiss biotech at about $28 billion. Paris-based Sanofi entered with its own proposal of about $275 a share, which included a so-called contingent value right, or CVR, for Actelion stockholders that would pay out depending on the performance of certain pipeline drugs, according to people familiar with the offer. Those talks faltered amid complications over the CVR, the people said.

    Lazard Ltd. is lead financial adviser to Johnson & Johnson with Citigroup Inc. also providing advice. Cravath, Swaine & Moore LLP, Homburger AG and SextonRiley LLP are J&J’s legal advisers. Bank of America Corp. is Actelion’s lead adviser, with Credit Suisse Group AG also providing advice. Niederer Kraft & Frey, Wachtell Lipton, Rosen & Katz, and Slaughter & May are legal advisers to Actelion.

     The boards of both companies have approved the deal; the closing is now pursuant to at least 67 percent of Actelion shares being tendered by its holders when the offer begins in mid-February. J&J plans to fund the takeover with cash held outside the U.S.

     The companies plan to hold a press conference at 1 p.m. local time at Actelion’s headquarters in Allschwil, and a call with investors an hour later, at 8 a.m. New York time.

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17. Johnson & Johnson agrees $30bn deal to buy Actelion

    Jan 26, 2017 | Irish Times

    Company to become a leader in medicines treating a rare type of high blood pressure

     Johnson & Johnson has agreed to buy Actelion for $30 billion, clinching one of its largest ever deals to become a leader in medicines treating a rare type of high blood pressure.

     With the purchase, J&J, already the world’s biggest maker of health-care products, is fulfilling its goal of adding a new drug category and dealing a blow to France’s Sanofi, which had also sought to acquire Actelion.

     J&J will begin a tender offer to buy shares of Allschwil, Switzerland-based Actelion for $280 each in cash, the companies said in a statement.

    The price, which equals 280.08 Swiss francs, is 23 per cent above Wednesday’s closing level. The R&D operations will be spun off to Actelion shareholders as a new publicly traded company, with J&J keeping a 16 per cent stake.

     The deal caps weeks of discussions interrupted for several days after New Brunswick, New Jersey-based J&J walked away on December 13th, only to return to the negotiating table about a week later.

     Hypertension

     Access to Actelion’s drugs Tracleer, Opsumit and Uptravi, which all treat life-threatening pulmonary arterial hypertension, will make J&J a leader in the disease and help it expand beyond autoimmune, heart and cancer drugs.

     Meanwhile, Sanofi is left empty-handed for the second time after losing out on cancer treatment maker Medivation to another US giant, Pfizer, in August.

     Actelion was founded 20 years ago by chief executive officer Jean-Paul Clozel, his wife Martine Clozel and a team of scientists who split from Roche Holding AG.

     The discovery of the blockbuster Tracleer propelled it over a decade ago to becoming a leader in the treatment of pulmonary arterial hypertension. Uptravi and Opsumit followed and are set to replace Tracleer, which has lost patent protection and faces challenges from copycat drugs.

     Clozel, who is among Actelion’s largest shareholders, had said in the past he wanted the company to remain independent. The chief executive is a believer in Actelion’s pipeline of experimental medicines, and he and his wife have resisted takeover bids over the years.

     Before walking away, J&J had made Actelion an offer that it later increased to about $260 a share, people familiar with the situation have said, valuing the Swiss biotech at about $28 billion.

     Paris-based Sanofi entered with its own proposal of about $275 a share, which included a so-called contingent value right, or CVR, for Actelion stockholders that would pay out depending on the performance of certain pipeline drugs, according to people familiar with the offer. Those talks faltered amid complications over the CVR, the people said.

     Advisers

     Lazard is lead financial adviser to Johnson and Johnson with Citibank also providing advice. Cravath, Swaine and Moore LLP, Homburger AG and SextonRiley LLP are J&J’s legal advisers.

     Bank of America Merrill Lynch is Actelion’s lead adviser, with Credit Suisse also providing advice. Niederer Kraft and Frey, Wachtell Lipton, Rosen and Katz, and Slaughter and May are legal advisers to Actelion.

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18. ACTELION STREET WRAP: Counterbid Unlikely, No Competition Issues

    Jan 26, 2017 | Bloomberg

    J&J agrees to launch an all-cash tender offer in Switzerland to acquire all of the outstanding shares of Actelion for $280 per share, spin off R&D unit. Offer payable in U.S. dollars, equates to CHF280.08/share as of Jan. 25 Actelion shares gain as much as 21.8%, JNJ shares gain 1.4% in pre-mkt trading M&A tearsheet here; for deal spread, click here

    CHURCHILL CAPITAL (buy) Most importantly Clozel is on side Actelion’s shareholders will be happy with the substantial premium and ability to participate in the pipeline through “SpinCo” shares There is no material antitrust risk As such, without the SpinCo value would expect a tight spread

    DEUTSCHE BANK (hold) NewCo will keep rights to multiple Phase I/II drugs, but hard to value these assets given lack of clinical data and the early stage of these compounds Investors will retain a holding in a company that has an enviable track record of delivering blockbuster drugs and drug discovery Estimate that the proposed NewCo will be worth ~CHF6/share, based on the cash/share value of NewCo’s balance sheet

    ODDO (accept the offer) Recommend accepting the offer, as acquisition multiples are high at 11x 2018e EV/sales and 26x 2018e core EV/Ebit J&J deal has come at the ideal time, offers a price that beats anything that Actelion’s shareholders might have hoped for

    MORGAN STANLEY (equal-weight) Had ascribed zero value to Actelion’s pipeline, as projects were at an early stage, and so too risky/uncertain Expect investors to give some value to phase 2 projects, on top of CHF1b cash position

    ZKB (market perform) Sees a higher tender offer as possible but “not all that likely” as offer is high and in cash

    JEFFERIES (hold) Doesn’t expect any counterbids or competition concerns NPV currently ascribes no value to R&D NewCo assets given their early-stage, but CHF5-CHF10/share EV may be reasonable Risks include the deal not completing by the end of 2Q (unlikely), and volatile FX rates given that it is USD bid

    RELATED:

    BI Primer: Actelion’s M&A Deal With J&J Prices Out Other Suitors
    

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19. Actelion

    Jan 26, 2017 | Jeffries

    JNJ Acquisition at CHF280; R&D NewCo Spun-off with Early-Stage Assets

     JNJ has agreed a $280/share cash acquisition of Actelion with drug discovery operations and early-stage clinical assets to be spun-out into a Swiss listed R&D NewCo. We do not envisage any counterbids or competition concerns, with the takeout price above our base case CHF250+, hence move to a CHF280/share PT. Our NPV currently ascribes no value to the R&D NewCo assets given their earlystage but we would estimate a CHF5-10/share EV may be reasonable.

     Acquisition to close by end-2Q: JNJ ($112, Hold) will launch an agreed all-cash tender offer for Actelion at $280/share (c.CHF280). Immediately prior to the completion Actelion will spin-out as a stock dividend its drug discovery and early-stage clinical assets into "R&D NewCo" that will be Swiss listed. JNJ will initially own 16% of R&D NewCo with rights to an additional 16% via a convertible note. JNJ also has an option on ACT-132577 in Phase II for resistant hypertension. R&D NewCo is to be led by Actelion's current team including Jean- Paul Clozel as CEO and Jean Pierre Garnier as Chairman.

     R&D NewCo creates additional value: The spin-out will include Actelion's established drug discovery capabilities in Allschwil, Switzerland and current R&D employees. JNJ is acquiring S1P1 agonist ponesimod in Phase III for relapsing multiple sclerosis and antibiotic cadazolid for C. difficile infections. Our CHF180/share NPV sum-of-the-parts currently only includes these pipeline products, ascribing CHF14/share (8%). We believe key Phase II assets within R&D NewCo are lucerastat (Fabry disease), ACT-132577 (resistant hypertension), DORA dual orexin receptor antagonist (insomnia), cenerimod (S1P1 for lupus), and potentially clazosentan (vasospasms after SAH). There are also at least four Phase I programmes. As an independent entity we believe many of the Phase II assets should likely be ascribed some value, with a CHF5-10/share (CHF500m-1bn) EV our preliminary "backof- the-envelope" estimate. The cash balance of R&D NewCo is undisclosed.

     Valuation/Risks

     Our CHF280 per share Price Target reflects the agreed acquisition price by JNJ, with no value ascribed to the R&D NewCo to be spun-out. Risks could include the unlikely scenario the acquisition does not complete by end-2Q and volatile FX rates given the USD denominated bid.

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20. J&J/Actelion: high pressure sale

    Jan 26, 2017 | Financial Times Lex

    Deal has the untidy look that can result from late concessions

     Pricey place, Switzerland. Those flashy watches cost thousands, local pharma companies even more. Johnson & Johnson has agreed to pay $30bn in cash for Actelion, and will not even get the whole drugs pipeline. Actelion shareholders should bite J&J’s arm off.

     This deal has the untidy look that can result from late concessions by an overly eager bidder when a rival acquirer is hovering. The US healthcare group gets a decent set of proven blood pressure drugs, albeit exposed at the mature end to generic competition. Founder and chief executive officer Jean-Paul Clozel will sail off into the sunset across Lake Lucerne helming a biotech comprising Actelion’s prospective and early stage treatments.

     

    A 16 per cent stake in this for J&J smacks of a “yes . . . but” from J&J boss Alex Gorsky, uttered in an airless room late at night. He can double up on this via a convertible note and also has an option on a hypertension drug in mid-stage clinical trials.

     Such bells and whistles cannot drown out the background strains of “Hey, Big Spender”. J&J is paying around 30 times earnings for Actelion, equivalent to a 77 per cent premium to the undisturbed three-month price. J&J itself trades at 11 times earnings. Analysts reckon Actelion’s treatments are nicely complementary to J&J’s. But scope for synergies is limited by intense marketing competition in blood pressure pharma.

     J&J is paying out of an offshore cash hoard. This explains why, at a time of rock-bottom interest rates, the purchase will be immediately accretive to earnings. It may also tell us something about how valuable Trumpian plans for slashing US corporate tax rates are to a business whose effective tax rate is already only 16.5 per cent.

     The steep premium is an artefact both of competitive bidding and international tax discrepancies. Actelion investors could justifiably spend some of the resulting windfall on a flashy Swiss watch or two.

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21. J&J seals Actelion acquisition for $30bn

    Jan 26, 2017 | Pharmaphorum

    By Richard Staines

    Johnson & Johnson has confirmed it is to acquire Swiss biotech Actelion for £30 billion, after beating off competition from Sanofi to clinch its biggest ever deal.

     The companies had been in talks for several weeks and at a price of $280 per share ($280.8 Swiss francs), J&J is paying a 23% premium over prices at close of the market on Wednesday.

     As part of the deal, Actelion’s R&D unit will be spun out into a standalone company based in Switzerland, although J&J will hold a 16% substantial minority interest. This means the new biotech will start off with around a billion Swiss francs ($1 billion) to kick start operations.

     Actelion brings with it a group of medicines that treat pulmonary arterial hypertension – the well established Tracleer (bosentan) is already a blockbuster, but more recently-approved Opsumit (macitentan) and Uptravi (selexipag) have been tipped to break the billion-dollars per year sales barrier.

     J&J will also get late-stage pipeline drugs from Actelion, a potential treatment for clostridium difficile-associated diarrhoea, and a pipeline multiple sclerosis drug.

     J&J will also receive an option on ACT-132577, a product within the R&D company being developed for resistant hypertension currently in phase 2 clinical development.

     Subject to approval by Actelion shareholders and financial regulators, the deal is expected to close in the second quarter of this year.

     Actelion’s chief executive Jean-Paul Clozel will also get a windfall, as he has agreed to tender all shares he owns into the offer, and vote in favour of the transaction at an extraordinary general meeting.

     In December, J&J walked away from talks, returning to negotations a week later, after failing to clinch a deal with Sanofi.

     J&J’s CEO Alex Gorsky said: “Adding Actelion’s portfolio to our already strong Janssen Pharmaceuticals business is a unique opportunity for us to expand our portfolio with leading, differentiated in-market medicines and promising late-stage products.”

     “We expect to leverage our established global presence and commercial strength to accelerate growth and patient access to these important therapies. Further, we believe R&D NewCo will be strongly positioned to continue Actelion’s legacy of innovation and look forward to collaborating on the development of cutting-edge new therapies.”

     The deal has kicked off what is expected to be busy year in pharma M&A as big pharma seeks to replenish drug pipelines, and so far Takeda has already struck a $5.2 billion deal to buy cancer drugs firm Ariad.

     But the closing of the deal was bad news for Sanofi, as it has now lost out on two big acquisition bids. Last year it tried to buy cancer drugs firm Medivation with a hostile bid, but lost out when Pfizer swooped in with a superior offer.

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22. Johnson & Johnson to buy Actelion for $30 billion, spin off R&D unit

    Jan 26, 2017 | Reuters

    By John Miller and John Revill

    U.S. healthcare giant Johnson & Johnson (JNJ.N) will buy Swiss biotech company Actelion (ATLN.S) in a $30 billion all-cash deal that includes spinning off Actelion's research and development pipeline, the companies said on Thursday.

     The acquisition gives J&J access to the Swiss group's line-up of high-price, high-margin medicines for rare diseases, helping it diversify its drug portfolio as its biggest product, Remicade for arthritis, faces cheaper competition.

     The offer to pay $280 per share, following weeks of exclusive talks, was unanimously approved by the boards of directors of both companies.

     The deal represents a 23 percent premium to Actelion's closing price on Wednesday of 227.4 Swiss francs and is more than 80 percent above the Nov. 23 closing price before initial reports emerged that Europe's biggest biotech company had attracted takeover interest.

     Actelion shares jumped 20.3 percent to 273.60 francs by 0932 GMT as investors welcomed the deal.

     "The structure is very attractive," said Eleanor Taylor Jolidon, a fund manager at Union Bancaire Privee in Geneva, a top-40 Actelion investor.

     The price vindicates the strategy of cardiologist Clozel, who co-founded the company with his pediatrician wife Martine and friends in 1997, and has fended off bids over the years in the belief he could increase Actelion's value by keeping it independent.

     "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," one Zurich-based trader said.

     "But it represents only 10 percent of (J&J's) market capitalization and they are finally investing the cash they hold in Europe."

     Jefferies analysts said they did not expect any counterbids or competition concerns to derail the deal, while Berenberg analysts called it "a fantastic deal for Actelion and its shareholders" given concerns about the long-term growth prospects for its main products.

     Actelion has been the subject of takeover speculation for weeks after J&J launched and then halted discussions with the Swiss company. French drugmaker Sanofi (SASY.PA) had also been interested, sources said, but was sidelined after J&J returned and began exclusive negotiations in December.

     Sanofi's failure to come away with a big deal for a second time has added to pressure on its management.

     R&D BUSINESS

     J&J said it expected the transaction to be immediately accretive to its adjusted earnings per share and accelerate its revenue and earnings growth rates.

     The U.S. group, which reported disappointing quarterly results this week, will fund the transaction with cash held outside the United States.

     "We believe this transaction offers compelling value to both Johnson & Johnson and Actelion shareholders," Alex Gorsky, J&J chairman and chief executive, said in a statement.

     Actelion will spin out its research and development unit into a standalone company based and listed in Switzerland, under the title of R&D NewCo and led by Jean-Paul Clozel. The break-up plan was first reported by Reuters last month.

     The shares of R&D NewCo will be distributed to Actelion's shareholders as a stock dividend and the new unit will be launched with 1 billion francs in cash.

     Urs Beck, fund manager at EFG Asset Management that holds Actelion shares, hailed the transaction.

     "J&J is a good partner with a huge distribution network. For Actelion's founders that is 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," he said.

     "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 any more," he added.

     J&J will initially hold a 16 percent stake in R&D NewCo and will have rights to an additional 16 percent of the company's equity through a convertible note. It will also get an option on ACT-132577, a product within R&D NewCo being developed for resistant hypertension and now in phase 2 clinical development.

     J&J said it expected to retain Actelion's presence in Switzerland.

     Lazard acted as lead financial advisor to J&J, while Bank of America Merrill Lynch was Actelion's lead advisor.

     The transaction is expected to close by the end of the second quarter, with J&J commencing the tender offer by mid-February. It needs to win at least 67 percent of all Actelion shares, regulatory approvals and Actelion shareholder approval of the distribution of shares of R&D NewCo.

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23. Johnson and Johnson to Acquire Swiss Biotech Firm for $30 Billion (JNJ)

    Jan 26, 2017 | Investopedia

    By Deborah DSouza

    Johnson and Johnson (JNJ) has agreed to acquire Swiss biotech firm Actelion for $30 billion in an all-cash deal.

     The American healthcare giant will pay $280 for each share and plans to spin-off Actelion's R&D unit into a separate business listed in Switzerland. This new company will be led by Actelion's CEO and founder Jean-Paul Clozel, and Johnson and Johnson will hold a minority stake in it. The transaction is expected to close by the end of the second quarter of this year.

     Actelion's pulmonary arterial hypertension drugs are complementary to Johnson and Johnson's Janssen Pharmaceuticals' portfolio, and the new research company will increase the latter's investment in the development of new drugs. (See also: Analysts Drop Price Targets on J&J)

     "Actelion has built an attractive, growing business with world-class commercial and clinical development capabilities," said Alex Gorsky, chairman and chief executive officer of Johnson & Johnson, in a statement. "Adding Actelion's portfolio to our already strong Janssen Pharmaceuticals business is a unique opportunity for us to expand our portfolio with leading, differentiated in-market medicines and promising late-stage products."

     The chairman of Actelion's board, Jean Pierre Garnier, who will stay on as chairman of the new R&D unit, said, "Jean-Paul Clozel and I have high expectations for this new, well-funded biotech company with a significant portfolio of drugs in the clinic. R&D NewCo will be led by an experienced and proven scientific team."

     Johnson and Johnson expects the deal to be immediately accretive to its adjusted EPS and accelerate its revenue and earnings growth rates. Long-term revenue growth rate is expected to increase by at least 1.0% and its long-term earnings growth rate by 1.5% - 2.0% above current analyst consensus. EPS accretion is expected to be $0.35 to $0.40 in the first full year.

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24. J&J finally seals $30 billion deal for Actelion

    Jan 26, 2017 | Pharmafile

    By Ben Hargreaves

    Johnson & Johnson has, as expected, wrapped up the deal to acquire Actelion in a deal worth $30 billion, working out at a deal of $280 a share. The deal excludes the R&D unit of Actelion, which will be spun out into a new publically traded company, named R&D NewCO, under the leadership of Actelion founder and CEO Jean-Paul Clozel.

     The deal sees J&J bolster its rare disease portfolio, particularly with Actelion’s products for pulmonary arterial hypertension that J&J sees as complementary to its current portfolio. As mentioned, the R&D department of Actelion will become its own entity but one in which J&J will have a 16% stake of. On top of this, it will hold rights to 16% of the company’s equity in a convertible note and an option upon one of the newly formed company’s pipeline treatments, ACT-132577. The medicine is being developed to treat resistant hypertension and is currently going through Phase 2 trials.

     The successful agreement upon the price of Actelion, barring any shock changes, will bring to an end the long-running story of the latter end of 2016 as Actelion tussled with both J&J and Sanofi over price. Initially, it was reported that J&J had had an offer of around $260 a share rejected in early negotiations, which allowed Sanofi to step in to offer an alternative deal. However, Sanofi’s deal included payment clauses that were dependent upon the successes of certain pipeline drugs, known as a contingent value right (CVR), that dissuaded Actelion from pursuing the deal further. This allowed J&J to step back into the ring with an improved offer, $260 to $280 a share, that sealed the deal.

     The value of the acquisition is already being questioned as being overpriced, especially as the R&D department is not included in the deal. However, it represents a trend within the industry, as mergers and acquisitions have become integral to larger companies’ growth so the prices of those mergers have increased. This has been witnessed in deals such as Teva’s acquisition of Allergan Generics for an eye-watering $40.5 billion in 2015, which made Teva the largest generics company in the world whilst facing strong criticism that the deal was vastly overpriced.

     “We believe this transaction offers compelling value to both Johnson & Johnson and Actelion shareholders,” said Alex Gorsky, chairman and CEO of Johnson & Johnson. “Actelion has built an attractive, growing business with world-class commercial and clinical development capabilities. Adding Actelion’s portfolio to our already strong Janssen Pharmaceuticals business is a unique opportunity for us to expand our portfolio with leading, differentiated in-market medicines and promising late-stage products. We expect to leverage our established global presence and commercial strength to accelerate growth and patient access to these important therapies. Further, we believe R&D NewCo will be strongly positioned to continue Actelion’s legacy of innovation and look forward to collaborating on the development of cutting-edge new therapies.”

     Gorsky’s observation on the value of the deal can perhaps be placed in the context that the acquisition, in an all-cash deal, represents 10% of its market capitalisation and puts to use its cash reserves held in Europe. The deal is expected to complete in the second quarter of this year.

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25. Johnson & Johnson to buy Actelion for $30B, spin out R&D unit

    Jan 26, 2017 | The Deal

    By Martin Baccardax

    Johnson & Johnson will purchase Swiss biotech Actelion Pharmaceuticals for $30 billion and plans to spin out the company's research and development unit into a separate business.

     Johnson & Johnson Inc. (JNJ) said Thursday it will purchase Swiss biotech Actelion Ltd. for $30 billion and plans to spin out the company's research and development unit into a separate business.

     J&J will pay $280 per share for the Allschwil, Switzerland-based group, which is the Swiss franc equivalent of Sfr280.08 per share, the companies said. Once the R&D unit is spun out, Actelion shareholders will receive a one-for-one holding in the new company as a dividend. The deal was unanimously approved by both boards, the statement said.

     "We believe this transaction offers compelling value to both Johnson & Johnson and Actelion shareholders," said Johnson & Johnson CEO Alex Gorsky. "Actelion has built an attractive, growing business with world-class commercial and clinical development capabilities."

     "Adding Actelion's portfolio to our already strong Janssen Pharmaceuticals business is a unique opportunity for us to expand our portfolio with leading, differentiated in-market medicines and promising late-stage products," Gorsky said. "We expect to leverage our established global presence and commercial strength to accelerate growth and patient access to these important therapies. Further, we believe R&D NewCo will be strongly positioned to continue Actelion's legacy of innovation and look forward to collaborating on the development of cutting-edge new therapies."

     Actelion shares rose 20.8% to  Sfr274.60 each in Zurich on Thursday. The shares have rise 12.57% since it confirmed exclusive talks with J&J on Dec. 21 but are more than 50% higher since takeover speculation first surfaced in late November.

     Lazard & Co. Ltd. acted as lead financial adviser to Johnson & Johnson. David Gluckman, Rolf Bachmann and Dale Raine were on the Lazard team.  Citibank also providing financial advice on certain matters. Cravath, Swaine & Moore LLP, Homburger AG and SextonRiley LLP are serving as legal advisors to Johnson & Johnson.

     Bank of America Merrill Lynch is serving as Actelion's lead financial advisor, with Credit Suisse AG also providing financial advice. Niederer Kraft & Frey AG, Wachtell, Lipton, Rosen & Katz, and Slaughter and May are serving as legal advisors to Actelion.

     Actelion said earlier this week that its potential blockbuster Opsumit drug failed to meet a key target in late-stage trials. Opsumit, a follow-up to the Swiss biotech's Tracleer treatment for patients with pulmonary arterial hypertension, missed a Phase 3 trial goal, measured by a "six minute walk test", the company said Monday.

     "Although the results point towards a benefit of treatment with macitentan, we do not see a significant treatment effect on the primary endpoint of exercise capacity as measured in the 6 minute walk test," Actelion said. "We need to fully analyze the data to understand what could have caused this phenomenon."

     J&J posted better-than-expected fourth-quarter earnings earlier this week and reiterated its aim to look at strategic options for the company that could include mergers or asset sales amid lower 2017 forecasts. The company said Thursday it expects that the Actelion purchase will be immediately accretive to earnings and revenue.

     The New Brunswick, N.J.-based group said earnings for the three months ended in December, excluding special items, came in at $1.58 a share, marginally higher than the $1.56 forecast of analysts. Revenue for the quarterly period was tabbed at $18.1 billion, the company said, just shy of the FactSet forecast of $18.26 billion.

     However, 2017 adjusted earnings forecasts were set at between $6.93 and $7.08 a share, well shy of analysts' estimates of $7.11. Revenue forecasts were set at $74.1 billion to $74.8 billion, short of forecasts of $75.1 billion.

     Johnson & Johnson shares closed at $112.80 each in New York Wednesday, up 0.93% on the session.

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26. Johnson & Johnson pays big for Swiss biotech firm Actelion

    Jan 26, 2017 | Euronews

    US healthcare giant Johnson & Johnson is to buy Actelion, Europe’s biggest biotech company – paying $30 billion (28 billion euros).

     The purchase gives Johnson & Johnson access to the Swiss group’s highly profitable range of medicines for rare diseases.

     The deal represents a 23 percent premium to Actelion’s closing price on Wednesday and is more than 80 percent above the November 23 closing price before takeover reports first emerged.

     The top price being paid is vindication for Doctors Jean-Paul and Martine Clozel, the husband-and-wife team who founded the company in 1997.

     They have fended off previous bids in the belief they could increase Actelion’s value by keeping it independent.

     The darling of European biotech

     Jeremy Cook, Chief Economist at World First hailed the deal: “Actelion is the darling of European biotech. You don’t get much better than Actelion. The drugs that they have created for hypertension, pulmonary hypertension, are industry leaders.”

     And J&J is not even getting all of Actelion which will spin off its research and development unit into a separate enterprise run by Jean-Paul Clozel. J&J will control up to 32 percent of the new company.

    Sanofi sidelined

     Actelion has been the subject of takeover speculation for weeks after J&J launched and then halted discussions with the Swiss company. French drugmaker Sanofi had also been interested, sources said, but was sidelined after J&J returned and began exclusive negotiations in December.

     Sanofi’s failure to come away with a big deal for a second time will add to pressure on its management.

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27. Johnson & Johnson snaps up Swiss biotech firm in $30bn deal

    Jan 26, 2017 | Silicon Republic

    By Gordon Hunt

    In an all-cash $30bn move, US healthcare company Johnson & Johnson is acquiring the Switzerland-based biotech company Actelion.

     Johnson & Johnson, the world’s largest healthcare giant, is not resting on its laurels after a profit warning was issued earlier this week, swooping in to snap up a major competitor in Europe.

     Costing $30bn in cash, the deal to acquire Actelion will help Johnson & Johnson diversify its drug portfolio, thanks to the former’s high-margin medicines for pulmonary arterial hypertension (PAH).

     Johnson & Johnson

     Actelion’s products are “highly complementary” to Johnson & Johnson’s Janssen arm, according to the company, with the acquisition also providing for the retention of Actelion’s Swiss presence.

     The deal includes spinning off Actelion’s R&D plans, creating a wholly separate Swiss biopharma company called R&D NewCo, looking at drug discovery operations and early-stage clinical development.

     “We believe this transaction offers compelling value,” said Alex Gorsky, chairman and CEO of Johnson & Johnson. “Actelion has built an attractive, growing business with world-class commercial and clinical development capabilities.

     “Adding Actelion’s portfolio to our already strong Janssen Pharmaceuticals business is a unique opportunity for us to expand our portfolio with leading, differentiated in-market medicines and promising late-stage products,” he said.

     On Tuesday Johnson & Johnson forecast lower-than-predicted 2017 profit, blaming currency impacts on its operations. The warning appeared to precede a drawn-out process of purchasing Actelion, though the opposite has proved true.

     R&D NewCo will be run by Actelion founder Jean-Paul Clozel and chairman Pierre Garnier.

     “In making this offer, Johnson & Johnson is recognising all that has been created at Actelion during the last 20 years, and in particular the quality of our PAH franchise, the potential of our key marketed medicines and our promising late-stage development assets,” said Clozel.

     “The newly created R&D company allows us to continue with our successful culture of innovation. It is enormously exciting to continue to develop new and differentiated products, in multiple therapeutic areas, to improve the lives of patients.”

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28. Johnson & Johnson's $30B takeover keeps cash overseas

    | CNNMoney

    By Alanna Petroff

    Johnson & Johnson isn't following President Trump's advice to buy American.

     It's spending $30 billion of its overseas cash pile on a Swiss biopharmaceutical company, Actelion (ALIOY).

     Johnson & Johnson (JNJ) has a reputation for keeping tens of billions in cash outside the U.S. to avoid paying high American corporate tax rates. Now it's putting the money to work.

     The company will still have about $12 billion in overseas cash after the deal closes, which is expected to be in the second quarter of this year.

     Other American companies have been reluctant to bring overseas profits home because of the 35% U.S. corporate tax rate, the highest among developed economies. Apple (AAPL, Tech30), General Electric (GE), Microsoft (MSFT, Tech30), Pfizer (PFE) and Merck (MRK) all keep tens of billions overseas.

     Asked on a conference call Thursday about tax implications, J&J chief financial officer Dominic Caruso said the Actelion deal was good in part because there were no U.S. taxes attached to it.

     "That's the most attractive tax rate -- zero," he said, but noted he was closely watching for any developments on tax reform in the United States.

     Trump has said he wants to lower U.S. corporate tax rates, which would encourage companies to bring money back into the United States.

     During the presidential campaign, he suggested a tax rate of 10%. But that may not have the effect he wants: When companies have been granted tax breaks in the past, very little cash ended up returning to the United States.

     Johnson & Johnson is known for baby shampoo and consumer products, but it makes the bulk of its revenue selling drugs and medical devices. It's buying Actelion to get access to its blood pressure drugs and other drugs in later stages of development.
    

    J&J said the takeover would boost sales and profits immediately. It will also lower the company's overall tax bill because Switzerland is known for comparatively low corporate tax rates. Executives did not say how much the deal would help J&J save in tax.

     A J&J spokesman said the company didn't know yet whether the takeover would affect jobs.

     50 billion offshore

     Companies like Johnson & Johnson that do business abroad can avoid paying U.S. taxes on the billions of dollars they keep offshore.

     As part of the deal, Actelion will spin off its early-stage research and development unit into a separate business that will stay in Switzerland. Actelion shareholders will get a stake in that business, and J&J will take a large stake, too.

     J&J and Actelion have been working on the takeover for months. It got dramatic in December when they publicly broke things off, only to return a few days later to exclusive talks.

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29. J&J agrees $30bn deal to acquire Actelion

    Jan 26, 2017 | PMLive

    By Phil Taylor

    Swiss biotech to retain control of early-stage pipeline as J&J takes minority stake in R&D spin-out

     The weeks of negotiation between Johnson & Johnson and Actelion have resulted in a deal that will see the Swiss biotech's R&D unit spun-out into a separate company.

     J&J has agreed to pay $280 per share in cash for Actelion - a 23% premium to Actelion's closing share price yesterday - as well as shares in the spin-off, and values the company at around $30bn. J&J will hold a 16% stake in the spin-off company with an option on another 16% through a convertible note.

     The terms allow Actelion's fiercely independent founder and CEO Jan-Paul Clozel to head up an unnamed Switzerland-based company and retain control of Actelion's early-stage pipeline, backed by a warchest of CHF 1bn (around $1bn).

    Meanwhile, J&J claims the company's marketed products including its trio of pulmonary artery hypertension (PAH) drugs, including Tracleer (bosentan) - now facing generic competition - as well as follow-up drugs Opsumit (macitentan) and Uptravi (selexipag). The two newer products are predicted to bring in combined sales of $4bn-plus by 2020.

     J&J also takes control of Actelion's late-stage pipeline, including multiple sclerosis candidate ponesimod and cadazolid for diarrhoeal disease, and the US group has also taken an option on ACT-132577, an Actelion candidate for resistant hypertension that is currently in phase II clinical development.

     The transaction - which some analysts have suggested is fairly pricey given that J&J will only end up with a minority stake in the R&D pipeline - the is expected to close by the end of the second quarter.

     News of the deal came just after J&J reported its fourth-quarter results, with revenues coming in below estimates thanks in part to slipping sales of top-selling product immunology drug Remicade (infliximab), down 3% in the fourth quarter following the onset of biosimilar competition.

     Analysts at Jefferies have said they do not expect any other drugmaker to come in with a counter offer for Actelion.

    Clozel will be CEO at the new spin-off, while Actelion's chairman Jean Pierre Garnier will take the same role at the firm. It has been suggested that Clozel's desire to retain control of some key candidates in Actelion's pipeline could have played a role in the breakdown of talks with Sanofi last year.

     "The newly created R&D company allows us to continue with our successful culture of innovation," said Clozel. "It is enormously exciting to continue to develop new and differentiated products, in multiple therapeutic areas, to improve the lives of patients."

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30. Johnson & Johnson's Foolishness Is on Full Display

    Jan 26, 2017 | Motley Fool

    By Sean Williams

    One of Actelion's lead drugs just stumbled in a phase 3 label expansion study. Why would J&J still go through with a buyout?

     For quite a number of investors, Johnson & Johnson (NYSE:JNJ) is a staple, long-term holding in their investing, retirement, and/or income portfolios -- and with good reason. Johnson & Johnson is one of around 50 Dividend Aristocrats to have raised its annual payout for at least 25 years running (2017 will presumably be J&J's 55th consecutive dividend increase), and it's also one of two remaining publicly traded companies that bears Standard & Poor's highest credit rating, "AAA."

     Furthermore, most of J&J's pharmaceutical, device, and even healthcare products, are inelastic, meaning consumers need them regardless of how well or poorly the U.S. economy is performing. Because of this, J&J can accurately be called a "go-to healthcare stock" for long-term investors.

     But, one thing even Johnson & Johnson isn't immune to is making a mistake and looking foolish (with a small "f"'). Earlier this week, J&J's foolishness, which we'll get to in a moment, was on full display for Wall Street and investors.

     Johnson & Johnson blindly chases Actelion

     For those who may not recall, Johnson & Johnson has been in ongoing discussions with Swiss-based drugmaker Actelion (NASDAQOTH:ALIOF) on two separate occasions since November. It was initially reported that J&J was willing to pay around $26 billion to acquire Actelion, which makes drugs designed to treat pulmonary arterial hypertension (PAH), a disease characterized by high blood pressure in the arteries between the heart and lungs. After unsuccessful negotiations, J&J backed away for a short time. However, as announced on Thursday morning, the second time was the charm, with J&J agreeing to acquire Actelion for $30 billion.

     Why was Johnson & Johnson so eager to make a move? The impetus is the launch of Inflectra, a biosimilar medicine that's being targeted at J&J's top-selling drug, Remicade. Developed by Celltrion, but licensed to Pfizer, Inflectra, which was launched in November, is priced at a 15% discount to Remicade. Long story short, J&J's top drug could be facing an intermediate-term sales decline, and the company is looking for ways to quickly fill the revenue gap. Actelion's niche drugs, which include Opsumit and Uptravi, both of which have blockbuster potential, would do the bulk of the work.

     It's no secret, either, that J&J has been on the hunt for inorganic growth opportunities. It had more than $40 billion in cash and cash equivalents on its balance sheet at the end of last quarter. However, it's far more common for J&J to acquire smaller companies than a business the size of Actelion given J&J's desire to control the development of drugs and devices from an early stage.

     This could be a foolish move

     However, it's been this Fool's contention for months that Johnson & Johnson could be making a foolish move by potentially overpaying for Actelion. In particular, chasing Actelion right now may be a poor idea considering just how many unknown variables are lurking within its product portfolio and pipeline. J&J's foolhardy pursuit of Actelion could bite it in the behind, as we witnessed this Monday.

     Before the opening bell this past Monday, Actelion announced that a 226-patient phase 3 trial involving Opsumit as a treatment for Eisenmenger syndrome failed to reach its primary endpoint of a statistically significant improvement in exercise capacity as measured by the six-minute walk test. Though success in the study would merely have expanded Opsumit's label and added somewhere in the neighborhood of $100 million to $200 million in peak annual sales, it nonetheless represents a reduction in peak annual projections for Opsumit's annual sales of between 5% and 10%. Considering the premium J&J has been offering Actelion, we're talking about perhaps $1 billion in lost valuation on this deal (assuming a multiple of five times peak sales), if not a hair more.

     But, this is far from the only question mark in J&J's pursuit of Actelion.

     For example, Tracleer, which was approved in 2001 and is Actelion's best-selling PAH drug, has lost its patent protection and is about to face generic competition. Generally, generic drugs can wipe out around half, if not more, of branded drug sales within a year since they're considerably cheaper than branded therapies. This would mean Tracleer's more than $1 billion in annual sales could dwindle to less than $500 million relatively quickly. Considering that Tracleer's sales in the first-half of the fiscal year comprised close to half of Actelion's total revenue, J&J could be in for an unpleasant surprise.

     There's also an ongoing phase 3 study examining ponesimod as a treatment for relapsing multiple sclerosis. Not only is it unknown if ponesimod will meet its primary endpoint in pivotal late-stage trials, but even if it does, will it offer any differentiation from current market share leader Gilenya? If ponesimod just winds up being par for the course, it may not move the needle much at all.

     Here's the thing about Actelion: if J&J had waited 12 months, we'd have had a much clearer picture of what Actelion's pipeline and product portfolio are worth. Executing a transaction now, though, risks overpaying for Actelion and essentially wasting much of J&J's $40 billion-plus in cash on hand.

     It's rare that J&J's often top-notch management team is directed criticism, but its blind pursuit of Actelion without understanding the variables that could be at work here isn't of any benefit to its shareholders.

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31. What You Need To Know About The JNJ Deal

    Jan 26, 2017 | Seeking Alpha

    By Jonathan Weber

    Summary

     ·         JNJ agrees to buy Actelion for $30 billion.

    ·         Using offshore cash is smart.

    ·         Acquisition will be accretive.

     Johnson & Johnson (NYSE:JNJ) has announced that it will Actelion (OTCPK:ALIOF) (OTCPK:ALIOY) for a total of $30 billion on Thursday morning. Let's look at the deal and what it means for investors.

     Johnson & Johnson's shares are down three percent over the last month, but this was mainly due to a small drop after the company released a rather conservative guidance for the current year. Actelion is up by four percent over the last month, as a deal announcement was expected.

     Johnson & Johnson has now agreed to acquire Actelion for $30 billion in an all cash offer, which values Actelion's shares at $280 each. Those who are wondering about the wide spread between the offer of $280 per share and the current trading price of ALIOY ($57) have to factor in that one of Actelion's ADRs (i.e. ALIOY) represents only one fourth of one of the company's shares. The takeover price Johnson & Johnson has agreed to thus means a price tag of $70 per ADR.

     The price discrepancy between the current trading price and the offer is still not small though, 23% at Wednesday's closing price. As both boards of directors have agreed to the deal already, I don't expect the deal to get blocked, which means that there could be some substantial merger arbitrage potential unless the price of Actelion's ADRs jumps up significantly.

     Johnson & Johnson has agreed to pay in cash only, which is good for the owners of both companies: Actelion's shareholders get cash and thus have more flexibility in comparison to a scenario where they are paid in Johnson & Johnson shares, and at the same time paying cash is good for Johnson & Johnson's owners, too.

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32. J&J Locks in Actelion Price in Dollars, Avoiding Franc Swings

    Jan 26, 2017 | Bloomberg News

    By Phil Serafino, Albertina Torsoli and Stefania Spezzati

    Johnson & Johnson is taking no chance of a nasty surprise from the currency market on its $30 billion acquisition of Actelion Ltd.

     J&J’s agreement to buy Allschwil, Switzerland-based Actelion specifies that the $280-a-share price will be paid in U.S. dollars -- even though Actelion is listed on the Swiss stock market and its shares are priced in Swiss francs. The decision means an unexpected surge in the franc against the greenback won’t drive up the purchase price, though J&J also won’t benefit from a weaker exchange rate between now and when the deal closes.

     Bankers and executives have fresh memories of January 2015, when the Swiss National Bank shocked financial markets by abandoning the franc’s cap against the euro, sending the nation’s currency soaring. China National Chemical Corp. also priced its pending $43 billion acquisition of Swiss agrochemical company Syngenta AG in dollars.

     “It’s a prudent thing to do when you want to lock in the price of a transaction,” Leopoldo Zambeletti, a former head of health-care banking at JPMorgan Chase & Co. and Credit Suisse Group AG and now an independent adviser, said by phone. “This way you limit the effect of the currency-exchange fluctuation.” Paying in dollars is “consistent with what we’ve done in previous transactions,” Joaquin Duato, J&J’s head of pharmaceuticals, said at a news conference. Andre Muller, Actelion’s chief financial officer, noted that dollars are J&J’s operating currency.

     Shareholder Choice

     A shareholder in Basel-based Syngenta asked Chairman Michel Demare in April why the offer was in dollars. Demare said the market is too small to absorb such a big inflow without considerable effects on the value of the franc. Also, most of Syngenta’s large investors invest in dollars, he said. However, the smallest shareholders are often given a choice. Investors who hold as many as 500 Syngenta shares at a Swiss bank will be able to receive payment in francs. Similarly, Actelion will set up a program for its Swiss investors who own no more than 1,000 shares so that they can be paid in the local currency.

     For both Actelion and Syngenta, the biggest percentage of their shareholders hail from the U.S., according to data compiled by Bloomberg.

     Currency Impact

     If J&J paid in francs for even part of the acquisition, it could swing the currency, according to market analysts.

     “Even one part of the operation would lead to a strong rise of the Swiss currency, so to make sure to have a stable level, they are locking the USD/CHF,” Nordine Naam, a Paris-based strategist at Natixis SA, said in an e-mail.

     The franc is often seen as a safe haven in times of political turmoil. Elections in France and Germany this year, unpredictable policies of U.S. President Donald Trump and the U.K.’s plan to quit the European Union may increase volatility before the Actelion purchase closes. J&J says it aims to complete the transaction by June 30.

     The currency is expected to depreciate to 1.04 francs to the dollar in the second quarter, according to the median forecast in a survey compiled by Bloomberg. Still, the most bullish forecast sees the Swiss franc appreciating to 0.97 against the dollar, while the most bearish sees the currency dropping to 1.11 at the end of June.

     The currency was trading at about 0.99 to the dollar on Thursday. After the Actelion deal was announced, the franc rose as much as 0.25 percent against the dollar and as much as 0.7 percent versus the euro, the highest since June 24.

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33. Johnson & Johnson to buy Swiss biotech company Actelion for $30bn

    Jan 26, 2017 | Financial Times

    By Ralph Atkins, David Crow

    Johnson & Johnson unveiled the biggest deal in its 130-year history on Thursday as the world’s largest healthcare company tries to revive its flagging pharmaceuticals division with a $30bn takeover of Swiss drugmaker Actelion.

     The acquisition ends a long quest by Alex Gorsky, J&J chief executive, to find a deal of sufficient size to boost growth at its drugmaking unit, and comes after months of on-again, off-again negotiations with Actelion, which had been a reluctant seller.

     If completed, the deal would be one of the largest in the pharmaceuticals sector since 2015. It could presage a period of intense consolidation among drugmakers — if Republicans press ahead with plans to allow companies to repatriate more than $100bn of offshore cash at a discounted tax rate.

     Mr Gorsky has spent years hunting for a deal to plug an impending decline in revenues from its top-selling medicine, the arthritis medicine Remicade, which generated more than $7bn in revenues last year.

     Remicade, one of the world’s top-10 grossing drugs, has been a cash cow for J&J since it was launched in 1998, but analysts and investors expect the company to lose significant share in the coming years after rivals launched cheaper “biosimilar” versions.

     J&J is offering Actelion’s shareholders $30bn in cash — considerably more than investors had been expecting — and has also agreed to a complex deal that will result in the Swiss company’s experimental medicines being hived off into a separate Zurich-listed company.

     J&J consented to the unusual structure to convince Jean-Paul Clozel, Actelion chief executive and founder, to part with the company he built from scratch.

     Mr Clozel, who will head the new Swiss company, demanded he keep control of Actelion’s research labs and its early-stage experimental medicines in exchange for consenting to the sale, which hands J&J a string of lucrative medicines for a relatively rare and deadly type of high blood pressure.

     For Mr Clozel, the deal at $280 per share caps two-decades during which he built Actelion into one of the world’s most-lauded biotech companies, and hands him a payout of roughly $1.5bn for his stake of 5 per cent.

     Shares in Actelion closed 21 per cent higher at SFr271.6, while J&J’s shares were flat during early trading in New York.

     J&J is paying more than 12 times Actelion’s estimated revenues this year, expensive even by the standards of the pharmaceuticals sector, which has been engaged in a dealmaking frenzy since 2014.

     Since Actelion was founded in 1997 in Basel, Mr Clozel has repeatedly resisted takeover approaches — and as recently as last September told investors he needed another three to four years to take the company to “another level”.

     On Thursday, Mr Clozel disclosed he had been approached initially by J&J a year ago. “I said I was not interested — that was very clear — but they really tried to convince me.” The agreed new structure was “unique” in the sector, he said, but “I think it will be a model for this type of acquisition”.

     J&J announced it had entered exclusive talks with Actelion in December after earlier negotiations had ended abruptly just a week before.

     If Actelion had been integrated fully into J&J, “there would have been redundancies, there would be some projects that didn’t fit with J&J’s strategy”, Mr Clozel added. Synergy cost savings were “not the motivation” for the deal and “not really the way to create value out of this deal”.

     Asked about his future role, Mr Clozel joked: “I’m going to stay in my little corner within the laboratories.”

     Under the deal, Actelion will spin off its drug discovery and early-stage clinical development assets into a separate company, which will be listed on the Swiss stock exchange.

     Shares in the new group will be distributed to Actelion investors with J&J holding an initial 16 per cent and the rights to a further 16 per cent. Mr Clozel will be chief executive of the research company and its chairman will be Jean-Pierre Garnier, Actelion’s chairman.

     The new group, expected to have about 600 or 700 employees, will start with SFr1bn in cash from the J&J equity stake and from the spin off from the rest of Actelion.

     The deal, which has been backed unanimously by Actelion’s board, is expected to be closed by the end of June.

     Eleanor Taylor Jolidon, fund manager at Union Bancaire Privée, who has Actelion and J&J shares in funds she manages, said: “It is a very good price — Actelion has a very attractive portfolio and that clearly what J&J is buying.

     “The structure of the deal is clean — creating a completely new company will allow shareholders to decide if they wish to have part of it. For J&J this is a better quality deal than other possible uses of their large cash pile.”

     Sibylle Bischofberger, analyst at Zürcher Kantonalbank, said “It’s a very good price and I can’t imagine it being increased.

     “I think Mr Clozel didn’t want to sell but he couldn’t prevent it. His passion is research and development — and that’s what he can continue.”

     Lazard was lead adviser to J&J with Citigroup assisting, while Bank of America was Actelion’s main adviser with Credit Suisse supporting on structuring the Swiss spin-off.

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34. Johnson & Johnson seals biggest European pharma deal in 13 years as it snaps up Actelion

    Jan 26, 2017 | The Telegraph

    By Julia Bradshaw

    Johnson & Johnson is buying blood pressure specialist Actelion in an all-cash deal that values the company at $30bn (£23.8bn), following months of complex negotiation and marking the first big pharmaceuticals transaction of the year.

     J&J, a US drugs and consumer goods giant, will use its cash reserves stored overseas to pay $280 a share for Actelion, reflecting a 23pc premium to the Swiss company's share price before news of the acquisition broke.

     The deal will give J&J ownership of Actelion's top-selling drug, tracleer, in addition to others that are already on the market. It will not only feed J&J's pipeline but give it exposure to a new therapy area and immediately boost the company's profits.

    The acquisition is not, however, a straightforward M&A deal. Immediately before it completes, Actelion will spin out its research and development into a new, billion-pound publicly listed Swiss company called R&D NewCo, of which J&J will hold a 16pc stake, with the right to acquire more.

     Mintoi Chessa-Florea, global head of healthcare coverage at Mergermarket, called the transaction another example of creative deal-making in big pharma.

     "​In  recent years we have seen the sector forge multi-billion joint ventures, asset swaps and spin-offs so that an Actelion takeover cum-spin-off is yet another melange of such precedents," she said.

     "The Swiss biotech’s longstanding commitment to research and independence and J&J’s desire to become a market leader in the pulmonary arterial hypertension, means both parties can benefit."

     The transaction is the second-largest biotech deal since 2001 and is also the largest European pharmaceuticals merger in 13 years, according to data from Mergermarket.

     Actelion was founded in 1997 by chief executive Jean-Paul Clozel, his wife Martine, both doctors, and a number of their colleagues.

     Its specialism is in treating life-threatening high blood pressure in the arteries between the heart and lungs, called pulmonary arterial hypertension. This causes the arteries to thicken or grow rigid, making blood flow more difficult.

     Mr Clozel will remain as boss of the new R&D business that is being spun out of Actelion.

     Alex Gorsky, chairman and chief executive of Johnson & Johnson, said the transaction offered value to both companies and their shareholders.

     "Adding Actelion’s portfolio to our already strong Janssen Pharmaceuticals business is a unique opportunity for us to expand our portfolio with leading, differentiated in-market medicines and promising late-stage products," he said.

     The merger was nearly scuppered, however, when discussions between the two companies were interrupted in December after J&J walked away from the table, only to return a week later. In that space of time, Actelion had started holding talks with French pharmaceuticals company Sanofi, which later collapsed.

     The bid, which has backing from both boards, values Actelion at 30 times its expected profits in 2017. By contrast, J&J trades on a multiple of less than 11, while European peers are valued at around 12 times.

     While the price tag on Actelion is expensive compared to recent industry takeovers, such as Pfizer's $14bn acquisition of Medivation last year, analysts at Jefferies argue that it is a good use of J&J's cash reserves.

     "The deal has decent (profit) accretion, adding 5pc to J&J's adjusted earnings per share in 2018. While it is expensive, we view it as a higher quality use of cash than share repurchases in the mid- to long term," they said.

     Ian Wootton, a healthcare specialist at Bank of Tokyo-Mitsubishi, said: "What remains to be seen is whether today’s news sets the tone and precedent for increased M&A pharma activity in 2017. That is still the multi-billion dollar question.”

     Shares in J&J were flat while Actelion's stock rallied 20pc by mid afternoon.

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35. Pharmalot, Pharmalittle: J&J pays $30 billion to buy Actelion

    Jan 26, 2017 | STAT

    By Ed Silverman

    Rise and shine, everyone, another busy day is on the way. Although not so busy for our shortest person, who is sleeping in thanks to a seasonal malady. Distractions aside, we are quaffing cups of stimulation and foraging for interesting items. Speaking of which, here is the latest crop. We hope your day goes well and would like to remind federal workers that we accept leaks — of any kind — and respect confidentiality. Have a smashing day, folks …

     Johnson & Johnson agreed to buy Actelion Pharmaceuticals for $30 billion, bolstering its portfolio of rare disease treatments as its top-selling drug, Remicade, faces new competition, the Wall Street Journal writes. As part of the deal, Actelion will spin off its drug discovery operations into a separate company called R&D NewCo, and J&J will initially hold 16 percent of the shares of the venture, with an option to buy another 16 percent.

     Senator Ron Johnson (R-Wis.) has re-introduced a bill to expand the ability of terminally ill patients to gain access to experimental medicines. The bill mimics “Right to Try” to laws that have passed in more than 30 states that are supposed to allow patients to leapfrog a drug development process that takes years before new treatments become available. Critics, however, say such legislation is misguided.

     Scientists are planning their own march on Washington, STAT informs us. “Our motivation is pretty straightforward,” says Dr. Caroline Weinberg, a science writer and public health researcher who is co-chairing the organizing group. “Scientists worldwide have been alarmed by the clear anti-science actions taken by the Trump administration.”

     The prescribing label for Biogen’s Tecfidera multiple sclerosis pill, a big-selling medicine, has been updated to include a warning of potential liver injury that could require hospitalization, although the label says signs of liver injury resolved when those patients stopped taking the medicine. None of the reported cases resulted in liver failure, liver transplant, or death.

     Senator Chuck Grassley (R-Iowa) continues to hound the Centers for Medicare and Medicaid Services to disclose whether the agency took any action to recover Medicaid rebates Mylan Pharmaceuticals was to have paid for misclassifying EpiPen. Last week, he chided CMS for a “lackluster and very disappointing response” and Wednesday sent a new letter in which he wrote: “I think you know what we want and you didn’t provide. We need records.”

     Endo International is eliminating 90 jobs — primarily among corporate staff, and brand-name medicine R&D workers in Malvern, Pa., and Chestnut Ridge, N.Y. — as part of a restructuring aimed at saving $40 million to $50 million a year. The move comes after the drug maker last year restructured its generics business and eliminated the US sales force that sold brand-name pain medications.

     The World Health Organization announced three finalists — Ethiopia’s Tedros Adhanom Ghebreyesus, Britain’s Dr. David Nabarro, and Pakistan’s Dr. Sania Nishtar — as finalists to succeed Director-General Margaret Chan, whose second term of office ends June 30, STAT reports. The election will take place in May at the World Health Assembly in Geneva.

     Several doctors filed briefs urging a federal appeals court to stop a permanent injunction that would force Sanofi and Regeneron Pharmaceuticals to pull the Praluent cholesterol-lowering drug off the market after a jury found patents infringed on Amgen patents for its rival medicine. They argue that patients would be harmed and clinical trials disrupted. However, one doctor is a well-paid consultant to Sanofi, although that was not disclosed in his brief.

     India’s Drug Controller General submitted a proposal to the health ministry to mandate upgrades of good manufacturing practices to align India with global regulations, PharmaBiz tells us.

     Porton Biopharma says it is undergoing a manufacturing review to address Food and Drug Administration concerns about the production of Jazz Pharmaceuticals’s orphan drug Erwinaze, InPharma Technologist says.

     The UK’s National Institute for Health and Care Excellence issued final guidance endorsing Gilead Sciences’s Epclusa to treat hepatitis C genotype 1-6 infection, PharmaTimes writes.

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36. Clozel Goes Back to His Roots Following $30 Billion Sale to J&J

    Jan 26, 2017 | Bloomberg

    By Naomi Kresge, James Paton and Roxana Zega

    After pocketing $1.5 billion from selling Actelion Ltd., co-founder and Chief Executive Officer Jean-Paul Clozel gets to return to his roots with a shot at another payday. Clozel and his team will keep the riskier portions of Actelion’s pipeline after selling the rest of the Swiss biotech to Johnson & Johnson for $30 billion under the terms of a deal announced Thursday. The experimental treatments -- drugs that are yet to go through the most exacting stages of clinical tests and regulatory scrutiny -- will be spun off into a new Swiss biotech that Clozel will helm.

     The challenge ahead has the French scientist fired up. “If we are not successful, I frankly think something is wrong,” Clozel told reporters in the Swiss city of Allschwil. “We know the products, because we have discovered them.” For his second fresh start, Clozel is walking away with a portfolio that includes experimental compounds for lupus, Fabry disease and insomnia. Actelion’s very profitable portfolio of drugs for pulmonary arterial hypertension, which have thus far funded the research into other medicines, will go to J&J.

     The new company could be worth about $1 billion to $2 billion, Klara Fernandes, an analyst at Berenberg Bank, wrote in a note to clients. Its cash and more advanced drugs in development could be worth about 14 to 20 Swiss francs a share, based on back-of-the-envelope calculation, said Peter Welford, an analyst at Jefferies LLC.

     ‘Unremarkable’ Pipeline

     The deal with the U.S. behemoth gives Clozel about $1 billion to push the treatments, many of which are viewed by investors as long shots in terms of sales potential. Few of the products may endure, investors said.

     “The entire pipeline is unremarkable at best,” said Ori Hershkovitz, founding partner and chief investment officer of Nexthera Capital LP, a New York-based health-care hedge fund with about $250 million under management. “I can clearly see why J&J were ready to let it go.”

     The new biotech will inherit the research and development team in Actelion’s headquarters city of Allschwil, just across the Rhine River from Roche Holding AG. Even the PAH drugs that lured J&J were born in Roche’s labs. When the company declined to pursue discoveries made by Clozel’s wife and co-founder Martine, the couple struck out on their own.

     Fresh Start

     Now the couple will take a similar risk, with new untested drugs. Clozel argued in an interview in November that the insomnia drug, Dora, could turn out to be “the best sleep drug on earth.” There’s also a medicine for a stubborn form of hypertension that is undervalued, according to Bruno Bulic, an analyst at Helvea AG. Clozel struck an upbeat note at a press conference on Thursday. “We have been able to create the value from zero,” he said. “Now we have a company with 13 or 14 new products.” J&J retains rights to ponesimod, an experimental drug in late-stage tests for multiple sclerosis, as well as a new antibiotic that’s also in the final stage of clinical trials.

     Therein lies one of the risks. “All the important drugs are going to J&J,” said Sibylle Bischofberger, an analyst for Zuercher Kantonalbank in Zurich. At the new company, only Dora has the potential to be a blockbuster, and there’s a high risk it could fail, she said.

     Magic Sauce

     The deal also gives J&J the inside track to benefit if Clozel is successful. The U.S. pharma giant will hold 16 percent of the new biotech’s shares and have rights to an additional 16 percent. J&J will also get an option on the experimental treatment for resistant hypertension, a mid-stage product dubbed ACT-132577.

     One thing Clozel has done right is letting his researchers loose on a range of diseases instead of trying to be just a central nervous system specialist or only a heart-disease company, said  John Rountree, managing partner at pharma consulting firm Novasecta Ltd. in London. With a broad remit, the new company will be able to try things and pursue what works, he said.

     “J&J is getting in on the Actelion magic sauce, and if it doesn’t deliver, they haven’t lost much,” Rountree said. “If it delivers, they’ve got the upside.”

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37. J&J Buying Actelion for $30 Billion Cash (JNJ)

    Jan 26, 2017 | Investopedia

    By Michael Kramer

    Johnson & Johnson (JNJ) announced this morning it was buying the Swiss pharmaceutical company Actelion for $30 billion in an all cash deal. The value of the deal comes to $280 per share which equates to roughly 279.50 Swiss Francs at current exchange rates of 0.9991 USD to CHF. The deal also includes spinning-off Actelion's R&D unit into a separate business.

     JNJ will get a 16% stake in the new R&D company and rights to another 16% through a convertible note. The consumer product and pharmaceutical giant will also receive an option on ACT-132577, a drug currently in Phase 2 for the treatment of resistant hypertension. The new R&D spin-off will start with cash of 1 Billion Swiss Francs. JNJ expects the deal to increase its long-term revenue growth rate by at least 1.0%.

     Actelion had total revenue of 2.0 billion Swiss Franc in 2015, according to financials posted on Actelion's website. Through the first nine months of 2016 Actelion reported total revenue of 1.7 billion Swiss Francs. JNJ reported total sales of $71.9 billion for the full year 2016. The Actelion deal would provide about 1.25% growth to JNJ's top line at current revenue rates. JNJ reported top line growth only grew 2.6% in 2016 and cited in its fourth quarter release it expects 2017 revenue in the $74.1 billion to $74.8 billion range.

     It appears, at $30 billion, JNJ paid roughly 15 times Actelion's revenue, which in my opinion seems excessive for the top line revenue it is getting in return. In my view, it shows how far some of these pharmaceuticals will go to continue to grow their business.

     In the end, Actelion gets what it wanted all along: the right to keep the R&D portion of the firm. As I have written about previously, Actelion was looking for the right deal and finally got the deal it could not refuse.

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38. Johnson & Johnson Holds on to Top Credit Ratings From Moody’s

    Jan 26, 2017 | Bloomberg

    By Dan Wilchins and Allison McNeely

    Johnson & Johnson remains a Aaa rated company even after it agreed to pay $30 billion cash for Swiss drugmaker Actelion Ltd., Moody’s Investors Service said in a statement on Thursday.

     The company’s rating outlook is stable, Moody’s said. The company retains its rating given its large scale, diversity and strong profit margins, the ratings company said.

     But the Actelion deal is negative for J&J’s credit because of the steep valuation, and because it depletes cash, Moody’s said. The drugmaker’s debt levels are likely to grow over time.

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39. J&J seals $30B deal for Actelion

    Jan 26, 2017 | BioPharmaDIVE

    By Ned Pagliarulo

    Dive Brief:

     ·       Johnson & Johnson on Thursday announced it would acquire Swiss biotech Actelion for $30 billion in cash, opening up its wallet to secure Actelion's leading portfolio of treatments for pulmonary arterial hypertension (PAH).

    ·       Per deal terms, J&J will pay $280 per share for Actelion, which will spin out its drug discovery and early-stage R&D efforts into a new public Swiss company to be led by Actelion CEO Jean-Paul Clozel.

    ·       The unique agreement gives J&J a franchise of marketed drugs on track to earn nearly $2.5 billion in sales this year, immediately boosting earnings per share for the pharma giant. At the same time, spinning out Actelion's R&D efforts allows Clozel to retain leadership over a pipeline Actelion valued more than J&J.

     Dive Insight:

     Acquiring Actelion and its PAH portfolio will bolster J&J's pharmaceutical revenues and help offset declining sales of the pharma giant's top-earner Remicade (infliximab), which now faces biosimilar competition in the U.S.

     J&J has seen promising growth from new cancer drugs Darzalex (daratumumab) and Imbruvica (ibrutinib), and has several major drugs in its pipeline nearing commercialization. But slowdowns in its neuroscience and cardiovascular segments weighed on revenues in 2016, while the competitive threat to Remicade had investors looking for a nearer term spark.

     Actelion delivers that spark, albeit at a price. J&J successfully boxed out French drugmaker Sanofi in negotiating a deal but will end up paying an 80% premium above Actelion's closing price on Nov. 23, the day before reports of a takeover trickled out.

     J&J expects the deal to increase long-term revenue growth by at least 1% above current consensus estimates, and to raise long-term earnings growth by 1.5% to 2.0%.

     Sales of Actelion's current top-earner, Tracleer (bosentan), have fallen in recent quarters due to generic competition. Future growth, then, will come from two successor drugs, also in PAH: Opsumit (macitentan) and Uptravi (selexipag).

     J&J will fund the transaction with cash currently held off-shore and expects the deal to close in the second quarter, pending the tender of at least 67% of Actelion shares into the offer.

     For Actelion shareholders, the deal is particularly attractive.

     "Actelion’s shareholders can monetize their holdings in Actelion at a highly attractive cash price of $280 per share, while at the same time retaining a significant stake in the future potential upside of Actelion’s earlier stage pipeline, through their ownership of R&D NewCo," said Jean Pierre Garnier, chairman of the board at Actelion, using the placeholder name for the spin-out.

     Clozel will take the reins of "R&D NewCo," which will focus on treatments for specialty cardiovascular, central nervous system, immunological and orphan diseases. Its lead candidate, ACT-132577, is in Phase 2 development for resistant hypertension.

     J&J will hold a 16% stake in R&D NewCo, with rights to another 16% through a convertible note.

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40. Jim Cramer: 'We Do Not Want to Own Drug Stocks'

    Jan 26, 2017 | The Street

    By Giovanni Bruno

    Despite calling Johnson & Johnson's move to acquire Swiss drug maker Actelion a 'great new frontier,' Jim Cramer advised investors to proceed with caution.

     Shares of Johnson & Johnson (JNJ) were inching lower Thursday morning, as reports surfaced today that the company will acquire Swiss drug maker Actelion to the tune of $30 billion. The move would take Actelion drugs to the "next level," J&J CEO Alex Gorsky said.

     The move appears to be an initiative by J&J to grow Actelion's high blood pressure medications.

     "Look, are they paying too much? They did say it would grow business 2%," TheStreet's Jim Cramer said on the floor of the New York Stock Exchange Thursday morning.

     Cramer called the move to develop and grow high blood pressure medications a "great new frontier."

     "I think that that is a franchise J&J could blowout," Cramer said.

     But, despite the deal, Cramer cautioned investors. "I thought the J&J quarter was very good, but I think that we always we need to be careful," he advised.

     He recognized that even after J&J talked about "responsible" drug pricing moving forward, the area remains one of risk based on comments from President Trump aimed at the sector and particularly pricing.

     "We do not want to own drug stocks," Cramer said.

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41. This Drug Could be Johnson & Johnson's Next Billion-Dollar Blockbuster

    Jan 26, 2017 | BioSpace

    By Mark Terry

    While the biggest news for Johnson & Johnson (JNJ) today is probably its $30 billion acquisition of Actelion (ALIOF.PK), a tidbit revealed in its fourth-quarter earnings report should get investors’ attention as well. Todd Campbell, writing for The Motley Fool, takes a look at J&J’s Darzalex.

     Darzalex (daratumumab) was approved by the U.S. Food and Drug Administration (FDA) in November 2016 in combination with lenalidomide and dexamethasone, or bortezomib and dexamethasone, to treat patients with multiple myeloma who have received at least one prior therapy. A year earlier it was approved in patients who had received at least three earlier treatments.

     In that regard, it was a drug for people running out of treatment options. In 2016, the first full year on the market, Darzalex sold $572 million. The November 2016 expansion will likely allow it to bring in even more revenue this year. Some analysts project potential sales to exceed $1 billion.

     According to the National Cancer Institute, there are more than 30,000 new cases of myeloma in the U.S. every year, and the five-year survival rate is only 48.5 percent. The leader in treatment is Celgene (CELG)’s Revlimid. It works very well and has a sky-high price tag, about $17,773 for 28 capsules, which is projected to bring in more than $8 billion this year.

     Campbell writes, “Darzalex isn’t going to displace Revlimid’s dominance in the indication anytime soon, but it is getting increasingly used in patients that have seen their disease return following Revlimid, and a recent label expansion means that it could see sales grow from being used in combination with it.”

     In the fourth quarter of last year, probably boosted by its new approval, it brought in $200 million, which gives the drug an $800 million annualized sales run rate. As Campbell notes, if the company could just boost sales by $50 million in this quarter, it’ll be on track to hit $1 billion.

     “Darzalex’s fast growth,” Campbell writes, “is especially important to the company (and investors) because Johnson & Johnson faces growth headwinds this year. The company’s top-selling drug, Remicade, began competing against biosimilars in the U.S. for the first time in November, and that competition could weigh down Remicade sales, which totaled $1.17 billion in Q4, down 1.7 percent year over year.”

     Then again, J&J just dropped $30 billion in Actelion, which allows its expansion into the rare disease market. As part of that deal, J&J picks up several drugs for pulmonary arterial hypertension (PAH), including Tracleer, Opsumit and Uptravi, some of which are believed will hit blockbuster status over the next couple years.

     In addition, as part of the deal, Actelion’s research-and-development area is being spun off into an independent, standalone company. J&J will hold a 16 percent stake in the new company and have rights to another 16 percent of its equity through a convertible note. It will also have an option on ACT-132577, a drug Actelion—and now the new company—is developing for resistant hypertension. It is currently in Phase II clinical development.

     J&J is paying $30 billion in cash, using funds that were locked up in Europe. J&J holds approximately $42 billion in overseas cash. Last year the company indicating that repatriating the cash to the U.S. would likely have tax implications. U.S. President Trump has indicated he was going to have a plan that would allow U.S. companies to bring home offshore cash, despite few if any details or a time table.

     Earlier this week, J&J announced its fourth-quarter profits just barely surpassed expectations. Its 2017 earnings forecast were also not what was expected.

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42. Advisers could land $100 million payday from Actelion sale

    Jan 26, 2017 | Reuters

    By Clara Denina

    Advisers could pocket up to $100 million in fees from Johnson & Johnson's $30 billion acquisition of Swiss biotech firm Actelion, the largest takeover of a European healthcare business in more than a decade.

     Four investment banks will share the advisory pot; J&J could cough up $30-$40 million in fees to its advisers, Lazard and Citi, while Actelion is expected to pay $45-$60 million to Bank of America and Credit Suisse, according to estimates from Thomson Reuters/Freeman Consulting.

     Lazard, which acted as lead adviser to J&J, is set to earn the most, followed by Bank of America, which acted as Actelion's lead adviser.

     The deal is the biggest takeover with a European pharma business as target since Sanofi-Synthelabo acquired rival Aventis 13 years ago to forge what is now Sanofi.

     It ranks as the third biggest globally in any sector this year, after British American Tobacco's $49.4 billion acquisition of U.S. rival Reynolds American Inc and a $49 billion all-share merger between Italy's Luxottica and France's Essilor to create a global eyewear powerhouse.

     The sale of Actelion, announced on Thursday after weeks of exclusive negotiations, is yet another windfall for M&A bankers, showing that Europe remains an attractive region for corporate deals despite uncertainty over Brexit and upcoming elections in France, Germany and the Netherlands.

     Global M&A activity fell 16 percent in 2016, while acquisitions of European companies dropped 13 percent to $756 billion, according to Thomson Reuters data. Advisory fees attached to global M&A deals fell 2 percent to $27 billion.

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43. Johnson & Johnson agrees to acquire Actelion Pharmaceuticals for $30 billion

    Jan 26, 2017 | Cardiovascular Business

    By Tim Casey

    Johnson & Johnson agreed to acquire Actelion Pharmaceuticals on Jan. 26 for approximately $30 billion.

     Actelion specializes in treatments for pulmonary arterial hypertension, including macitentan (Opsumit), selexipag (Uptravi), bosentan (Tracleer), epoprostenol for injection (Veletri) and iloprost (Ventavis).

     The boards of directors of both companies approved the transaction, which is subject to customary closing conditions. The companies said in a news release that they expect the deal to be closed by the end of the second quarter of 2017.

     Johnson & Johnson said it would acquire all of Actelion’s outstanding shares for $280 per share. The company expects the deal to be immediately accretive to its adjusted earnings per share.

     After completion of the deal, Actelion plans on spinning out its drug discovery operations and early-stage clinical development assets into a new company, which Johnson & Johnson has temporarily named “R &D NewCo.” The shares of the new company will be listed on the SIX Swiss Exchange in Switzerland, where Actelion is based. Actelion’s shareholders will receive shares of the new company via a stock dividend.

     Jean-Paul Clozel, MD, Actelion’s CEO and founding member, will lead the new company. Johnson & Johnson will hold 16 percent of the shares in the new company, have an option to purchase an additional 16 percent and have an option to the rights of ACT-132577, a medication being developed for resistant hypertension.

     On Nov. 25, Actelion confirmed in a news release that Johnson & Johnson had inquired about acquiring the company. However, Johnson & Johnson withdrew from the discussions in mid-December, and Sanofi approached Actelion about a deal. One week later, Johnson & Johnson and Actelion entered into exclusive negotiations, which culminated with the acquisition announcement on Jan. 26.

     “We believe this transaction offers compelling value to both Johnson & Johnson and Actelion shareholders,” Johnson & Johnson chairman and CEO Alex Gorsky said in a news release. “Actelion has built an attractive, growing business with world-class commercial and clinical development capabilities. Adding Actelion’s portfolio to our already strong Janssen Pharmaceuticals business is a unique opportunity for us to expand our portfolio with leading, differentiated in-market medicines and promising late-stage products.”

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44. J&J to pay $30 billion for Actelion

    Jan 26, 2017 | Chemical & Engineering News

    By Lisa M. Jarvis

    Ending months of negotiations, Johnson & Johnson will pay $30 billion to acquire the Swiss biotech firm Actelion. The proposed transaction is the biggest to date in a year expected to bring significant deal-making by big pharmaceutical companies.

     The purchase—the biggest ever for J&J—gives the pharma firm a portfolio of treatments for pulmonary arterial hypertension (PAH), a rare type of high blood pressure that affects the lungs and heart. Those PAH drugs collectively brought in more than $2 billion in sales in 2015.

    Actelion first confirmed in November that J&J had approached with a takeover offer, though by December, Sanofi emerged as a possible suitor.

     Ultimately, J&J, which is grappling with new competition in the U.S. for its top-selling drug, Remicade, was willing to get creative with the structure of the deal.

     Although the big pharma firm is capturing Actelion’s PAH portfolio and late-stage pipeline, Actelion’s drug discovery activities and some early-stage drug candidates will be spun out into a newly created biotech firm. J&J will hold a 16% stake in the new company, and has the right to later buy another 16%.

     The yet-to-be-named biotech will be outfitted with $930 million in cash and run by Actelion’s existing scientific team, retaining upwards of 700 out of Actelion’s 2,500 employees, Jean-Paul Clozel, founder and CEO of Actelion, said at a press conference. Clozel will lead the new company.

    The purchase of Actelion is the first major deal in a year expected to bring heavy merger and acquisition activity as drug firms grapple with pressures ranging from lagging productivity, new competition from biosimilars, and uncertainty around drug pricing.

     Celgene added to this year’s mergers & acquisitions tally, saying today it would pay $300 million up front to acquire Delinia, a privately held biotech firm developing treatments for autoimmune diseases. Delinia’s shareholders could see another $475 million in milestone payments as its molecules advance into the clinic.

     Delinia was just launched in September, when it announced it had raised $35 million in funding from Atlas Venture and Sofinnova Partners to develop proteins that can modulate the activity of regulatory T cells.

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45. J&J Boosts Drug Roster With $30B Actelion Deal

    Jan 26, 2017 | CFO Magazine

    By Matthew Heller

    In the largest deal in its history, Johnson & Johnson is boosting its roster of high-margin medicines for rare diseases by acquiring Swiss biotech company Actelion for $30 billion.

     The $280-per-share transaction represents a 23% premium to Actelion’s closing price on Wednesday and is more than 80% above the Nov. 23 closing price before reports emerged that Europe’s biggest biotech company had attracted takeover interest.

     As part of the largest European takeover in 13 years, Actelion will spin off its research and development unit into a standalone company to be based and listed in Switzerland, under the working title of R&D NewCo.

     J&J cited Actelion’s “innovative products for pulmonary arterial hypertension” in announcing Thursday that it was acquiring the company, beating out rivals such as French drugmaker Sanofi.

     “Adding Actelion’s portfolio to our already strong Janssen Pharmaceuticals business is a unique opportunity for us to expand our portfolio with leading, differentiated in-market medicines and promising late-stage products,” J&J Chief Executive Alex Gorsky said in a news release. “We expect to leverage our established global presence and commercial strength to accelerate growth and patient access to these important therapies.”

     As Reuters reports, J&J has been seeking to “diversify its drug portfolio as its biggest product, Remicade for arthritis, faces cheaper competition.” The company had reported disappointing fourth-quarter results earlier this week.

     Actelion’s products include Opsumi and Uptravi for PAH and it is also developing a treatment for multiple sclerosis. Cardiologist Jean-Paul Clozel co-founded the company with his pediatrician wife Martine and friends in 1997.

     “The newly created R&D company allows us to continue with our successful culture of innovation,” Clozel said Thursday.

     A Zurich-based trader told Reuters that the price J&J is paying 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.”

     But the trader added that the deal “represents only 10 percent of [J&J’s] market capitalization and they are finally investing the cash they hold in Europe.”

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46. For J&J, $30B Actelion deal is less about synergies, more about future promise

    Jan 26, 2017 | MedCity News

    By Arundhati Parmar

    The rationale for big deals in the devices sector in the past few years has been about synergies. Think about the $49 billion mega-merger of Medtronic and Covidien. Or the combination of Biomet and Zimmer.

     But in the world of Big Pharma, especially in the last few years, acquisitions are about finding new markets and growth as patent cliffs loom. Johnson & Johnson’s $30 billion purchase of Swiss biotech firm Actelion should be seen in that light. Synergy is more of an afterthought in this deal. Here’s a quick breakdown of the transaction announced Thursday:

     J&J will pay $30 billion ($280 per Actelion share) in cash to acquire Actelion, mainly known for drugs treating pulmonary arterial hypertension.

     A new unnamed (NewCoR&D) company will be spun out in which the New Brunswick company will have a 16 percent equity stake that will work on pipeline products. They will include treatments for specialty cardiovascular disorders, central nervous system disorders, immunological disorders and orphan diseases.

     “The main reason of this deal is to continue to build on the strength of the pulmonary hypertension franchise and the late-stage pipelines of Ponesimod, Cadazolid as well as the agreement to commercialize the ACT 577,”said Joaquin Duato, executive vice president and worldwide chairman, J&J, according to a webcast of a press conference held at the company’s headquarters in Switzerland. “Synergies will play a small role and they will come mainly from administrative areas.”

     Ponesimod and Cadazolid are drugs being developed to tackle multiple sclerosis and Clostridium difficile-associated diarrhea. ACT-577 is a resistant hypertension drug in Phase II trials. The new research company is expected to be spun out in June and floated in the Swiss exchange.

     J&J’s move is to shore up Big Pharma’s position in new markets even though the price tag is high.

     “While some investors may question the price JNJ is paying for Actelion, the deal reflects the scarcity value of assets large enough to move the needle on revenue and EPS (earnings per share) growth,” wrote Glenn Novarro, an RBC Capital Markets analyst, in a research note.

     In other words, there aren’t a lot of biotechs out there that can provide immediate and noteworthy revenue upside. But J&J’s chief financial officer pushed back on this idea of how some investors are viewing this deal.

     “We have higher expectations on the penetration and the expansion of these products that maybe currently anticipated by the investor community and that’s a result of our in-depth discussions with Actelion, our review of the potential here and so we feel very confident that there is plenty of upside over and above what’s been currently modeled,” said Dominic Caruso, according to a transcript of a conference call from Seeking Alpha.

     There is a reason for investor concern.

     Patents of blockbuster drugs expiring mean more generic competition for Big Pharma. The mood was best captured at a morning reception during J.P Morgan’s annual healthcare conference in San Francisco recently. After attendees responded that large pharma companies won’t see growth much at all in 2017, a Merck executive explained that as a result, dealmaking for biotechs will be up.

     “So then the corollary becomes, ‘what do you do to fix it’ and that’s when you pay too much for a biotech company,” declared Sunil Patel, vice president and head of corporate development at Merck.

     J&J may have paid too much, but one good news that J&J is that there are no U.S. tax implications.

     “The purchase at $30B is more than steep and the contribution to J&J’s top-line outlook is de minimis, but because it effectively puts the company’s OUS cash to work, it is easily accretive,” wrote Michael Weinstein, an analyst with J.P. Morgan, in a research note Thursday.

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47. Terms Set; J&J acquiring Actelion and ownership interest in new R&D Co

    Jan 26, 2017 | Deutsche Bank

    We see the deal as a positive as it is a unique transaction structure that creates immediate value and provides potential long term upside through the  ownership interest in a new, standalone R&D company. We reiterate our Buy. Before the open, J&J announced a definitive agreement to acquire Actelion (ATLN-rated Hold-CHF272) for US$280/share in an all cash tender offer, a value of $30 billion. J&J had previously confirmed it had been in exclusive talks with Actelion thus the deal was not a surprise. Actelion is CHF2.4 billion a Swiss pharma/biotech company specializing in pulmonary arterial hypertension.

     We view the deal, which is expected to close in 2Q, positively as:

     ·       Actelion’s drugs expand J&J’s portfolio in the area of cardiovascular disease. Actelion’s key marketed products include Opsumit and Uptravi for PAH. There are also two late stage drugs in the pipeline that are attractive -- Ponesimod (Phase 3) is for relapsing Multiple Sclerosis and Cadazolid (Phase 3) is an antibiotic for C. difficile. J&J also has the option for ACT- 132577 which is in phase 2 for resistant hypertension. We believe the current portfolio and the pipeline bring greater assurance that J&J’s pharma business can manage through its upcoming patent expirations and grow above its pharma peers. Our ATLN analyst currently projected sales to grow from CHF2.4B in 2016 to over CHF4B by 2024.

     ·       The acquisition accelerates J&J’s near and long term sales and EPS growth rates.  J&J  estimates  the  deal  should  be  $0.35-$0.45 per share accretive  to  earnings in its first  full  year.  J&J expects the acquisition to shares to be undervalued currently (we rate J&J a Buy) and believe the acquisition strengthens the outlook for pharma and the overall company.

     ·       We believe the transaction structure should allow for the creation of additional value over time. Actelion will spin-off a new R&D company which will include the early stage clinical development assets which will    be listed on the Swiss Exchange. J&J will maintain a 16% ownership stake with the option to acquire an additional 16% through a convertible note.  The NewCo will retain rights to multiple Phase I/II drugs including ACT-132577 (Phase II; essential hypertension), cenerimod (Phase II; Lupus), DORA (Phase II; insomnia), clazosentan (Phase II; subarachnoid haemorrhage) and lucerastat (Phase I/II; Fabry's disease). At the present time, however, it is difficult to determine the value of the assets given the early stage of the compounds.

     ·       The acquisition was also a tax efficient use of J&J’s cash as Actelion was a Swiss company and as such, J&J was able to fund the  deal using its cash  held outside the United States.

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48. J&J’s Actelion Buy Brings Strong Midterm Growth in Rare Diseases; High Price Lowers Fair Value

    Jan 26, 2017 | Morningstar

    Actelion has agreed to be purchased by J&J in an all-cash deal for $30 billion ($280/CHF 280 per share), far exceeding our stand-alone Actelion fair value estimate of CHF 112 per share. J&J expects this deal to improve long-term revenue growth rates by at least one percentage point and long-term earnings by 1.5-2 percentage points, which fits with our stand-alone Actelion estimates. With the deal expected to close in the second quarter, we are lowering our J&J fair value estimate from $112 to $108 due to the overpayment for the acquisition. The deal is priced at roughly 10 times our 2019 Actelion sales estimate of almost $3 billion, which seems difficult to justify without confidence that this growth is sustainable in the long run. However, beyond a weak 2017 (due to generic Tracleer launches in the U.S.), we do expect Actelion to see strong midterm growth in the 2018-20 time frame as Uptravi's launch continues. This growth will be particularly valuable to J&J as it attempts to plug the potential hole created by biosimilar Remicade, and Actelion will help J&J further guarantee the stability of its wide economic moat. We plan to raise our Actelion fair value estimate to match the deal price (assuming minimal additional value for the R&D spin-off).

     Actelion has been considered an acquisition target for years because of its strong pricing power in a rare-disease market, the promising launch of new drugs Opsumit and Uptravi, and Switzerland domicile (which allows J&Jto use offshore cash for the deal). However, we remain concerned that generic options of Actelion’s Tracleer (launching in the United States in 2017) and Gilead's Letairis (launching as early as 2018) will weigh on Opsumit's pricing power, and we don't see differentiation or focus in the pipeline that J&J is acquiring in MS and infectious disease.

     Prior to the close of the acquisition, Actelion will spin off an R&D portion of its current business, which will be funded with CHF 1 billion in cash following the close of the acquisition (J&J will hold a 16% stake in this new firm). We note that J&J will acquire full rights to Actelion’s most advanced pipeline candidates, including ponesimod in MS and antibiotic cadazolid, and will also have an option on a Phase 2 hypertension drug, implying that the new R&D firm will be focused on an early to mid-stage pipeline including therapeutic areas such as lupus (cerenimod), brain hemorrhage (clazosentan), and insomnia (dual orexin receptor antagonist).

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49. J&J's Acquisition of Actelion Speaks to Arena's Pipeline

    Jan 26, 2017 | FBR Capital Market

    J&J acquisition of Actelion’s (ATLN-SW, Not Rated) provides validation of ARNA’s pipeline, by our analysis. ATLN’s pipeline is driven by its Pulmonary Arterial Hypertension (PAH) franchise generating revenues of $1.78B through 3Q16. J&J acquired a large portion of ATLN’s pipeline for $30B. Approximately $8B of the $30B may be attributed to competing drugs that are in ARNA’s pipeline. ATLN's  PAH  franchise  includes  Opsumit,  Tracleer,  and  Uptravi,  with  sales  of  $596M,  $790M, and

    $160M, respectively through 3Q16. ARNA’s oral prostacyclin receptor modulator for PAH may have  an improved pharmacological profile over ATLN’s Uptravi (selexipag, recently approved). Furthermore, similar to ARNA, ATLN’s pipeline also has a selective S1P modulator for autoimmune disease. ATLN’s S1P modulator is for MS in Phase III, while ARNA’s is in Phase II for UC. ARNA’s selective S1P receptor modulator is designed to engage S1P1, S1P4, and S1P5 receptors, while avoiding S1P2 and S1P3, preventing safety issues. Note that in 2015 Celgene acquired Receptos for $7.4B largely for its selective S1P modulator, ozanimod.

     ·       Actelion's products and pipeline. As part of the acquisition, J&J will receive global rights for three of Actelion's marketed products for the treatment of PAH, which include (1) Tracleer, an endothelin receptor antagonist (ERA) the original PAH drug; (2) Opsumit, a second generation dual ERA for PAH, which received FDA approval in 2013; (3) Uptravi (selexipag), a prostacyclin receptor antagonist, approved by the FDA in 2015. In addition, J&J will obtain global rights to ponesimod, an S1P1 receptor modulator, currently in Phase III trials for the treatment of multiple sclerosis.

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50. Johnson & Johnson’s Most Exciting Opportunity

    Jan 26, 2017 | Motley Fool

    By Todd Campbell

    Johnson & Johnson's (NYSE:JNJ) fourth-quarter financials this week suggest that cancer drugs will be the biggest driver of the company's success in 2017. Can cancer drug sales continue to soar? Here's why cancer drugs could be Johnson & Johnson's most exciting opportunity in 2017.

     Making headway

    Global spending on cancer drugs eclipsed $100 billion two years ago, and aging and longer-living populations worldwide have IMS Health projecting that global spending on cancer medicine could hit $150 billion in 2020.

     Demand in the U.S. is expected to grow significantly due to aging baby boomers, and advancing technology that's providing greater insight into the relationship between our genes and the disease is allowing drugmakers like Johnson & Johnson to develop increasingly more useful and targeted therapies.

     Thanks to its big commitment to cancer drug development in the past, Johnson & Johnson markets four top-selling cancer medicines, two of which are enjoying rapid demand growth.

     After the FDA OK'd its use alongside Revlimid in second-line patients in November, sales of Johnson & Johnson's multiple myeloma drug Darzalex jumped to an $800 million annualized sales pace in the fourth quarter. That's impressive given the drug's only been on the market since late 2015.

     The company's leukemia and lymphoma drug, Imbruvica, which it co-markets with AbbVie, Inc., is also seeing robust sales growth. Thanks to label expansions that boosted its addressable patient population, Imbruvica sales climbed 47.2% year over year to $346 million.

     In addition to Darzalex and Imbruvica, the company also markets the billion-dollar blockbuster drugs Velcade, which is used to treat multiple myeloma, and Zytiga, which is a commonly used prostate cancer drug. In Q4, Velcade's and Zytiga's sales were $274 million and $519 million, respectively.

     Overall, Johnson & Johnson's oncology sales grew 14.8% year over year to $1.46 billion last quarter. If momentum for Darzalex and Imbruvica carry over into 2017, then this company could end up producing over $6 billion in oncology revenue this year.

     Expanding its position

    Johnson & Johnson's got a number of intriguing studies under way that could expand the use of its existing cancer drugs and lead to new therapies.

     For example, the company is conducting studies on Imbruvica that it thinks could lead to seven FDA filings for its use in new indications. Among those seven are four that Johnson & Johnson thinks could each be worth $500 million or more in annual sales.

     The company's apalutamide (ARN-509) is one of the most intriguing cancer drugs in the company's research pipeline that could reach the market soon. If it does, it could shore up the company's leadership position in prostate cancer.

     Currently, Johnson & Johnson's Zytiga battles for market share against Xtandi, a fast-growing competitor. Lately, Xtandi's sales have been growing more quickly than Zytiga, but Xtandi could lose some momentum if apalutamide trials pan out. That's because apalutamide is arguably a second-generation Xtandi developed by the same researchers who developed Xtandi.

     Also, Johnson & Johnson could further strengthen its prostate cancer position if trials evaluating niraparib in the indication pan out. Johnson & Johnson licensed rights to develop niraparib for prostate cancer last April from Tesaro. A PARP inhibitor that can prevent repair to damaged cancer cells, Johnson & Johnson thinks nirparib's unique mechanism of action could differentiate it. As part of this deal, Johnson & Johnson also took an equity stake in Tesaro, which gives it back-door exposure to a potential approval of niraparib in breast cancer this year.

     Looking forward

    Johnson & Johnson is a global and diversified company with $33 billion in full-year pharmaceutical sales, and $72 billion in total global sales across all of its businesses. The company's size gives it big advantages over its peers, including the ability to spend heavily on research and invest in promising upstarts.

     Investments like those will be increasingly important to Johnson & Johnson investors this year, because the company's multibillion-dollar rheumatoid arthritis drug, Remicade, began facing off against biosimilars in the U.S. in November. While Johnson & Johnson's oncology franchise might not overcome all of Remicade's headwinds, I think growth for the company's cancer drugs is one of the most exciting reasons to own this stock in 2017.

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51. Johnson & Johnson: Fair Is Fair

    Jan 26, 2017 | Seeking Alpha

    Johnson & Johnson is the principle example of a blue chip stock, with a strong dividend policy and stable business.

     Key events include Darzalex MM penetration, Imbruvica label expansion, Remicade erosion, Actelion acquisition, medical devices restructuring and competition along with value creation from M&A like Vogue and AMO.

     Relative Valuation shows Johnson & Johnson trades close to its peers, history, and how it has historically traded against its peers - Fair in all aspects.

     Dividend-discount model shows Johnson & Johnson is fairly valued (within margin of error, technically slightly overvalued). DCF shows upside of around 20-25%, but only if consensus estimates hold.

     Long-term investors don't have much reason to leave the stock, but investors new to the stock should consider delaying investment for a better opportunity.

     Johnson & Johnson (NYSE:JNJ) is a well-known defensive play in the stock market due to its strong dividend policy and healthy (pun intended) business. At this time, I consider Johnson & Johnson a hold or sell, depending on risk appetite and whether or not the holding account is tax advantaged. The stock is fairly valued at this time on the basis of relative and absolute valuation. Furthermore, while 2017 will not be a poor year for JNJ, it likely won't be a blockbuster year either as Remicade feels the brunt force of Inflectra and medical devices see increased competition and pricing pressures.

     The pharmaceutical segment has grown in both absolute and relative terms over the last few years due to significant autoimmune sales, introduction of key oncology drugs such as Imbruvica and price increases. Medical devices have seen a decline as the business matures plus competition and pricing pressures increase. Consumer health has mostly remained flat with a slight decline in the last few years, especially in the baby care and women's health divisions.

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52. J&J-Actelion Deal Validates Arena’s Pipeline: FBR

    Jan 26, 2017 | Bloomberg First Word

    About $8b of JNJ’s $30b takeover of Actelion may be attributed to rival drugs in Arena Pharma pipeline, FBR analyst Rahul Jasuja (Outperform, PT $6) wrote in a note.

    Says ARNA’s oral prostacyclin receptor modulator for PAH "may have" an improved pharmacological profile over Actelion’s Uptravi Similar to Actelion, Arena has a S1P modulator for autoimmune disease in the pipeline Actelion S1P modulator for multiple sclerosis is in Phase 3, while Arena’s modulator for ulcerative colitis is in Phase 2 NOTE: ARNA down 1% while United Therapeutics, whose PAH drug Orenitram is a competitor to Actelion’s Uptravi, gave up earlier gains NOTE: ARNA 3 buys, 5 holds, 0 sells, avg PT $4.50: Bloomberg

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53. J&J boss’s long quest ends with $30bn Actelion deal

    Jan 26, 2017 | Financial Times

    By David Crow

    Johnson & Johnson’s $30bn acquisition of Actelion, the Swiss biotech group, caps a years-long quest to find a deal of sufficient size to boost flagging growth at the world’s largest healthcare company.

    J&J was compelled to act by the dreaded ‘patent cliff’ — the moment when a drugmaker loses its exclusive right to sell a medicine, and faces instant competition from cheaper rivals.

    In October, Pfizer launched a copycat version of J&J’s best-selling drug, the arthritis medicine Remicade, which generated more than $7bn of sales last year. Alex Gorsky, J&J’s chief executive, had to act, and fast.

    The deal is the largest in J&J’s 130-year history, and among the biggest in the pharmaceuticals industry in recent years. But it was not so much the size of the deal that surprised analysts and investors as the unusual structure, which saw J&J forego the rights to many of Actelion’s experimental medicines.

    For $30bn, J&J picks up all of Actelion’s marketed drugs, including its lucrative medicines for pulmonary arterial hypertension (PAH), a serious and relatively rare type of high blood pressure that can prove fatal if left untreated.

    But all of Actelion’s early-stage drugs will be hived off into a new Swiss-based biotech group at the behest of its colourful co-founder and chief executive Jean-Paul Clozel, who with chairman Jean-Pierre Garnier fought to keep control over the company’s research labs. They will take the same roles at the as-yet-unnamed Zurich listed company.

     

    On Thursday, both companies touted the structure as a solution to a problem that has bedevilled big pharma deals for decades: many promising experimental medicines end up being shelved or neglected in the ensuing integration, having fallen victim to cost-cutting or rivalries between different factions of scientists.

    “A complete takeover of the company would not allow us to grow those fragile flowers,” said Mr Garnier on a call with analysts and investors. “You have to nurture them and make sure that they produce products and, for that, we needed the independence.”

    If those fragile flowers end up blooming, J&J will benefit indirectly through its 16 per cent stake in the new biotech group, and its option to acquire a further 16 per cent at a later date.

    Mr Garnier also said J&J would be a “natural partner” should the smaller group need the heft of a larger company to help it commercialise any successful medicines, although there is nothing in the agreement that stops it from working with rival drugmakers.

    Although the deal structure could ultimately result in the discovery of more successful medicines, it makes the transaction — already pricey by recent standards — even more of a stretch for J&J.

    Jeffrey Holford, analyst at Jefferies, says the deal was “expensive by most conventional multiples’ at more than 12 times Actelion’s revenue forecast for 2017.

    Shares in J&J, which were already down 1.75 per cent following lacklustre earnings, fell a further 0.6 per cent on Thursday.

    The deal process was also not particularly competitive by recent standards, in stark contrast to J&J’s last attempt to clinch a mega deal in 2015, when it was gazumped in the race to buy blood cancer group Pharmacyclics. AbbVie ended up as the victor in that battle, paying $21bn for the prize.

    Sanofi, the French drugmaker, held talks with Actelion, but people briefed on those negotiations say they quickly stalled when the Swiss group demanded it keep control of the early-stage drug pipeline.

    Several of J&J’s US-based rivals also glanced at Actelion, say people briefed on the discussions, but instead chose to wait for a much-anticipated tax holiday being planned by Republican lawmakers.

    Such a holiday would allow pharmaceutical companies to repatriate about $100bn cash they have stashed in low-tax jurisdictions, including in Europe, back to the US at a discount rate where they could spend it on deals in their domestic market.

    J&J decided not to wait, however, a move that some analysts attributed to its need to move more quickly to plug the impending decline in sales of Remicade.

    On Thursday, J&J’s chief financial officer, Dominic Caruso, defended the decision, insisting that its use of overseas cash to fund a foreign transaction was the most efficient use of capital because it would incur no US tax whatsoever.

    “Obviously, that's the most attractive tax rate — zero — so I don't think we're foregoing any benefit of any future tax reform,” Mr Caruso says.

    With annual revenues of almost $72bn last year, J&J might also have struggled to find a transaction large enough to make a material difference to its growth prospects. “It's very difficult to move the top line of the company of our size,” Mr Caruso says.

    J&J estimates the acquisition of Actelion will boost its revenue growth by roughly 1 per cent over a three-to-five-year period, while adding between 35 and 40 cents to its earnings per share in the first year after the transaction closes.

    However, the company said its projections were predicated on a rosier view of the potential of Actelion’s PAH drugs than “may be currently anticipated by the investor community”.

    Although Actelion is an undisputed leader in PAH, it is not immune from competitive threats, according to Andrew Baum, an analyst at Citi. He argues that Opsumit, Actelion’s most promising medicine, is vulnerable given its high price tag of almost $100,000 a year.

    From 2018, the medicine will face increased competition from a cheaper generic version of a similar medicine, Ambrisentan, according to Mr Baum — “especially in an increasingly cost-conscious environment”.

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54. Mergers help boost European shares; Johnson & Johnson’s $30bn deal to purchase Swiss firm Actelion lifts shares (Excerpt)

    Jan 27, 2017 | Irish Times

    By Charlie Taylor

    European shares held around one-year highs yesterday, supported by mergers and acquisitions-related optimism, with Johnson & Johnson's $30 billion deal to buy Actelion lifting shares in the Swiss biotech firm.

    Actelion surged 19.4 per cent after the US healthcare giant's move to make an all-cash purchase that includes spinning off the Swiss firm's research and development pipeline.

    The acquisition gives J&J access to the Actelion's line-up of high-price high-margin medicines for rare diseases.

    …

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55. Johnson & Johnson strikes $30bn deal

    Jan 27, 2017 | Irish Examiner

    By John Miller and Paul Arnold

    US healthcare giant Johnson & Johnson (J&J) has reached agreement to buy Swiss biotech company Actelion in a $30bn (€28bn) all-cash deal that includes spinning off Actelion’s research and development pipeline, the companies said yesterday.

    The biggest European drugs takeover in 13 years gives J&J access to the Swiss group’s range of high-price, high-margin medicines for rare diseases, helping it diversify its drug portfolio as its biggest product, Remicade for arthritis, faces cheaper competition.

    The offer to pay $280 per share, following weeks of exclusive talks, was unanimously approved by the boards of directors of both companies.

    Meanwhile, US drug firm Biogen has reported a near 22% fall in fourth-quarter income, hurt by higher costs related to its top-selling MS drug, Tecfidera.

    The Boston-based company — which paid Irish drug firm Elan $3.25bn for its Tysabri MS drug four years ago — said net income attributable fell to $649.2m from $831.6m. Biogen, which is set to spin off its hemophilia business in February, said total revenue inched up to $2.87bn from $2.84bn.

    Biogen said, this week, Tecfidera’s label has been updated to include a warning of potential liver injury.

    Tecfidera, the world’s top-selling oral MS treatment, accounts for about a third of Biogen revenue. It had sales of $1.03bn in the third quarter.

    Jefferies analysts said they did not expect any counterbids or competition concerns, while Berenberg analysts called it “a fantastic deal for Actelion and its shareholders” given concerns about the long-term growth prospects for its main products.

    Actelion has been the subject of takeover speculation for weeks after J&J launched and then halted discussions with the Swiss company.

    French drugmaker Sanofi had also been interested, sources said but was sidelined after J&J returned and began exclusive negotiations in December. Sanofi’s failure to come away with a big deal for the second time has added to pressure on its management.

    J&J said it expected the transaction to be immediately accretive to its adjusted earnings per share and accelerate its revenue and earnings growth rates.

    The group, which reported disappointing quarterly results this week, will fund the transaction with cash held outside the US.
    

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56. Johnson&Johnson swallows Actelion's medicine for $30bn

    Jan 27, 2017 | The Times

    By Alex Ralph

    The world's largest healthcare company has struck a $30 billion deal to buy one of Europe's most coveted biotech companies after weeks of complex negotiations.

    Johnson& Johnson, the US group, is to pay $280 a share for Swiss drugmakerActelion in the biggest European drugs takeover for 13 years. As a result the Swiss drugmaker's research and development pipeline is to be spun off into a standalone listed company.

    The deal is Johnson & Johnson's biggest takeover and gives it access to Actelion's rare disease medicines, particularly for pulmonary arterial hypertension, at a time when it is under pressure to replenish its drugs cabinet. Remicade, its blockbuster arthritis drug, is facing cheaper competition.

    It comes just days after Johnson & Johnson forecast that its profit and sales for this year would fall below Wall Street's expectations.

    The companies entered into exclusive talks shortly before Christmas, a week after negotiations broke down. Actelion had been in discussions over a possible deal with Sanofi, the French drugmaker. Shire, one of Britain's biggest drug companies and a specialist in hyperactivity treatments, was also understood to be interested.

    Amid questions over whether Johnson & Johnson had overpaid and why Actelion had suddenly changed its mind, Jean-Paul Clozel, the chief executive who co-founded the company in 1997 with Martine, his wife, and friends, said that he had overcome his opposition after a unique deal structure was agreed.

    "After a few months we found the solution. It is a unique solution in the pharmaceutical industry. I hope it will be a new model for this sort of acquisition," Mr Clozel said.

    "Maybe the price was the least important. Maybe most important was we create a structure that works."

    The standalone business, which will be listed in Switzerland and hold SwFr 1 billion in cash, will be headed by Mr Clozel, who will oversee up to 700 of the group's 2,500 employees. The rest of the workforce will remain with Actelion. Johnson &Johnson will hold an initial 16 per cent stake with rights to double its holding.

    Johnson& Johnson is looking to bring its marketing and commercial firepower to develop Actelion's latestage and in-market products and to bolster its existing Janssen Pharmaceutical business.

    The US company said the deal would immediately boost its earnings per share and accelerate its revenue and profit growth rates.

    Joaquin Duato, worldwide chairman of pharmaceuticals at Johnson & Johnson, said mergers and acquisitions, which have historically comprised about half of its growth, would remain an important part of its strategy.

    The terms of the deal, to be funded with cash held outside of the US, represent a premium of more than 80 per cent to Actelion's share price before reports of a potential tie-up emerged towards the end of November.

    Shares in Actelion rose almost 20 per cent in Switzerland yesterday, up SwFr 44.7 to SwFr 272.1. Shares in Johnson &Johnson fell 96 cents to $111.84 in New York last night.

    Jefferies, the US broker, said it did not anticipate any counterbids or competition concerns and said the takeover price was above forecasts. The deal needs to secure regulatory approval and the support of at least 67 per cent of Actelion shares in issue. If approved it is expected to complete in the summer.

    'Not such a big deal for shareholders' Deirdre Hipwell Comment Johnson & Johnson has needed a "transformational" acquisition for a long time, but it is not easy to find such a deal for a company with sales of more than $70 billion.

    Dominic Caruso, chief financial officer, said last July that the group was finding it very hard to do. He also said that it would consider deals of any size for any of its three main businesses, pharmaceutical, consumer and medical devices.

    "We're agnostic whether it's big or small. We do look at areas where we might not be in the market today, where we might add a whole other therapeutic focus," he said. "Our strategy in pharma is licensing and collaborations and not major acquisitions. That doesn't mean we're not going to do one."

    The purchase of Actelion is the largest M&A deal this year as well as the 12th largest pharmaceutical deal of all time. The $30 billion purchase is expensive considering that Johnson & Johnson is forecasting that the deal will boost its long-term revenue growth by a modest 1 per cent above the market consensus.

    However, it does allow Johnson & Johnson to put the cash it holds outside the US to work. It has also been holding an overall higher amount of net cash — $18.5 billion last year — than it has typically held and deploying capital now to potentially create greater value should please shareholders.

    Up until yesterday Johnson & Johnson had been a bystander to the flurry of deals in pharmaceuticals and healthcare since 2014. Its last big deal was in 2011 when it bought Synthes, a US medical devices maker, for $20.8 billion. It recently lost out to Abbvie in an attempt to buy Pharmacyclics, the maker of a top-selling blood cancer drug.

    Michael Weinstein, an analyst at JP Morgan, said: "The Actelion acquisition should be value-creating for shareholders. Nonetheless, we think investors would have preferred an acquisition that made a bigger impact to both the top and bottom lines rather than what appears to be more of a financial transaction that utilises Johnson & Johnson's significant out-of-the-United States cash balance."
    

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57. Hedge Funds Track J&J Private Jet for an Edge on Actelion Score

    Jan 27, 2017 | Bloomberg

    By Dinesh Nair, Nishant Kumar, Manuel Baigorri

    Burned by failed deals, poor returns and client withdrawals, hedge fund managers needed a home run.

    With each passing day last week, as a Johnson & Johnson corporate jet remained mostly parked a short drive from Actelion Ltd. headquarters near Basel, Switzerland, they grew increasingly confident of a big score.

    They struck paydirt Thursday when J&J agreed to buy Actelion for $30 billion, sending the drugmaker’s shares soaring almost 20 percent -- 44 percent the past six weeks. Och-Ziff Capital Management Group LLC had built a stake worth about 767 million Swiss francs ($766 million), according to a filing on Dec. 24. Eton Park Capital Management’s bet was almost $500 million and Elliott Management Corp.’s $200 million, according to people with knowledge of the matter. Spokesmen for Och-Ziff, Eton Park and Elliott declined to comment.

    “The deal has been a strong conviction bet," said Philippe Ferreira, head of research at Lyxor Asset Management in Paris, which invests in hedge funds. Hedge funds "have been invested for a couple of months now."

    Actelion was one of the top-five long bets for hedge funds speculating on the success or failure of mergers and acquisitions, according to Lyxor. Several managers have allocated 5 percent to 10 percent of their assets to the deal.

    They backed up their belief with some virtual shoe leather, tracking the movements of the J&J Gulfstream since it touched down on Jan. 15 at EuroAirport Basel Mulhouse Freiburg. The monitoring underscored the effort by hedge funds to gain an information edge in a world awash with news and data.

    Private Jet

    It was the jet’s first flight to the Swiss city in at least three months, according to data compiled by FlightAware. The aircraft mainly didn’t move -- save a trip to Antwerp -- before leaving on Tuesday morning.

    Hedge funds are known to follow weather patterns, hire people to count delivery trucks coming out of a factory or sending analysts to study body language of a chief executive. Chasing the movement of an aircraft marks yet another unconventional approach as they struggle to outperform equity markets.

    Speculating on M&A is becoming harder and investors are deserting hedge funds focusing on corporate transactions. More than $1 trillion in deals fell apart last year, on top of about $960 billion that collapsed in 2015, according to data compiled by Bloomberg. Event-driven hedge funds suffered $38.5 billion in withdrawals last year, the most of any strategy, according to data from eVestment.

    Strategies focusing on deals gained 3.7 percent last year, trailing an average 5.5 percent return in broader hedge funds, as they were hit by some high profile deals collapse.

    Failed Deals

    Pfizer Inc. and Allergan Plc’s terminated their $160 billion merger in April, bringing an abrupt end to the record health-care acquisition as officials in Washington cracked down on tax-driven deals. Halliburton Co. and Baker Hughes Inc. also called off a $28 billion merger that faced resistance from antitrust regulators.

    The scramble for an Actelion takeover echoed hedge funds’ bets that talks between AbbVie Inc. and Shire Plc in 2014 would result in a merger. They didn’t.

    The Actelion bet was safer, two hedge fund managers involved in the deal said. One reason its stock surged close to the offer price of $280 on Thursday was investors’ confidence that the deal had a high probability of success because of the buyer’s commitment and the lack of regulatory hurdles, they added.

    "Its been a very attractive opportunity for us," said Jason Dillow, chief investment officer of Halcyon Capital Management, which manages $9.3 billion.

    Halcyon started betting on Actelion in November, when the stock was trading around $180 a share. Dillow said the share still offers more than 8 percent upside until it closes.

    Investors will also benefit from Actelion’s plan to spin out its drug discovery operations and early-stage clinical development assets into the newly created R&D NewCo. Shares of R&D NewCo. will be distributed to Actelion’s shareholders as a stock dividend.

    It’s another chance for them to juice their returns from one of their most successful bets this decade.
    

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58. J&J-Actelion Deal Validates Arena’s Pipeline: FBR

    Jan 26, 2017 | Bloomberg First Word

    About $8b of JNJ’s $30b takeover of Actelion may be attributed to rival drugs in Arena Pharma pipeline, FBR analyst Rahul Jasuja (Outperform, PT $6) wrote in a note.

    Says ARNA’s oral prostacyclin receptor modulator for PAH "may have" an improved pharmacological profile over Actelion’s Uptravi Similar to Actelion, Arena has a S1P modulator for autoimmune disease in the pipeline Actelion S1P modulator for multiple sclerosis is in Phase 3, while Arena’s modulator for ulcerative colitis is in Phase 2 NOTE: ARNA down 1% while United Therapeutics, whose PAH drug Orenitram is a competitor to Actelion’s Uptravi, gave up earlier gains NOTE: ARNA 3 buys, 5 holds, 0 sells, avg PT $4.50: Bloomberg

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59. For J&J, $30B Actelion deal is less about synergies, more about future promise

    Jan 26, 2017 | MedCity News

    By Arundhati Parmar

    The rationale for big deals in the devices sector in the past few years has been about synergies. Think about the $49 billion mega-merger of Medtronic and Covidien. Or the combination of Biomet and Zimmer.

    But in the world of Big Pharma, especially in the last few years, acquisitions are about finding new markets and growth as patent cliffs loom. Johnson & Johnson’s $30 billion purchase of Swiss biotech firm Actelion should be seen in that light. Synergy is more of an afterthought in this deal. Here’s a quick breakdown of the transaction announced Thursday:

    J&J will pay $30 billion ($280 per Actelion share) in cash to acquire Actelion, mainly known for drugs treating pulmonary arterial hypertension.

    A new unnamed (NewCoR&D) company will be spun out in which the New Brunswick company will have a 16 percent equity stake that will work on pipeline products. They will include treatments for specialty cardiovascular disorders, central nervous system disorders, immunological disorders and orphan diseases.

    “The main reason of this deal is to continue to build on the strength of the pulmonary hypertension franchise and the late-stage pipelines of Ponesimod, Cadazolid as well as the agreement to commercialize the ACT 577,”said Joaquin Duato, executive vice president and worldwide chairman, J&J, according to a webcast of a press conference held at the company’s headquarters in Switzerland. “Synergies will play a small role and they will come mainly from administrative areas.”

    Ponesimod and Cadazolid are drugs being developed to tackle multiple sclerosis and Clostridium difficile-associated diarrhea. ACT-577 is a resistant hypertension drug in Phase II trials. The new research company is expected to be spun out in June and floated in the Swiss exchange.

    J&J’s move is to shore up Big Pharma’s position in new markets even though the price tag is high.

    “While some investors may question the price JNJ is paying for Actelion, the deal reflects the scarcity value of assets large enough to move the needle on revenue and EPS (earnings per share) growth,” wrote Glenn Novarro, an RBC Capital Markets analyst, in a research note.

    In other words, there aren’t a lot of biotechs out there that can provide immediate and noteworthy revenue upside. But J&J’s chief financial officer pushed back on this idea of how some investors are viewing this deal.

    “We have higher expectations on the penetration and the expansion of these products that maybe currently anticipated by the investor community and that’s a result of our in-depth discussions with Actelion, our review of the potential here and so we feel very confident that there is plenty of upside over and above what’s been currently modeled,” said Dominic Caruso, according to a transcript of a conference call from Seeking Alpha.

    There is a reason for investor concern.

    Patents of blockbuster drugs expiring mean more generic competition for Big Pharma. The mood was best captured at a morning reception during J.P Morgan’s annual healthcare conference in San Francisco recently. After attendees responded that large pharma companies won’t see growth much at all in 2017, a Merck executive explained that as a result, dealmaking for biotechs will be up.

    “So then the corollary becomes, ‘what do you do to fix it’ and that’s when you pay too much for a biotech company,” declared Sunil Patel, vice president and head of corporate development at Merck.

    J&J may have paid too much, but one good news that J&J is that there are no U.S. tax implications.

    “The purchase at $30B is more than steep and the contribution to J&J’s top-line outlook is de minimis, but because it effectively puts the company’s OUS cash to work, it is easily accretive,” wrote Michael Weinstein, an analyst with J.P. Morgan, in a research note Thursday.
    

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Television Coverage

60. Bloomberg Daybreak: Americas

    | Bloomberg TV

    Fox Business News

    Mornings With Maria Bartiromo

    26 January 2017

    http://app.criticalmention.com/app/#/clip/public/b0bd7fd1-0e33-4b1f-be58-d753b0fbd855
    

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61. Mornings With Maria Bartiromo

    | Fox Business News

    Fox Business News

    Mornings With Maria Bartiromo

    26 January 2017

    http://app.criticalmention.com/app/#/clip/public/6f1984a3-cc97-4589-b46c-e5f90fb56ff3

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62. Squawk Box

    Jan 26, 2017 | CNBC

    CNBC

    Squawk Box

    26 January 2017

    http://app.criticalmention.com/app/#/clip/public/fff0a15a-cc04-46fd-98be-f47cb03dfb71

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63. Bloomberg Markets: Americas

    Jan 26, 2017 | Bloomberg

    Bloomberg Markets: Americas

    Bloomberg

    January 26, 2017

    View Clip Here: http://app.criticalmention.com/app/#clip/view/25840049?token=d080d06d-9780-47e9-8f09-8e839059b47d

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