Johnson & Johnson and Actelion disclose ‘exclusive’ deal talks
Drug groups renew negotiations one week after discussions broke down
J&J, the world’s largest healthcare company, and Actelion said in separate statements that they had rekindled discussions surrounding a potential transaction but cautioned that there was no certainty that a deal would be reached.
Actelion, Europe’s biggest biotech company, with a market value of $22.5bn, has long been coveted by larger pharma groups for its record of discovering lucrative treatments for rare diseases, such as pulmonary arterial hypertension.
The company’s top-selling drug, Tracleer, generated $238m in revenues in the third quarter, while two other drugs, Opsumit and Uptravi, have been tipped as “blockbusters” by analysts, meaning that they are expected to generate sales in excess of $1bn a year.
Just last week, talks between the two companies ended abruptly after a disagreement over price that prompted J&J to walk away from negotiations.
At that point, J&J was discussing an all-cash acquisition that would value Actelion at about $250 a share, two people briefed on the talks said. That would give the Swiss company’s equity a value of about $27bn.
Jean-Paul Clozel, the Actelion chief executive who founded the company in 1997, would prefer a complex deal that would leave him with some degree of control over some early-stage drugs in Actelion’s pipeline, several people briefed on his thinking said.
When talks with J&J broke down, Actelion continued to discuss a possible transaction with Sanofi, the French drugmaker, fuelling speculation among investors that those two companies were nearing an agreement.
But the new statements from J&J and Actelion on Wednesday, which described the talks as “exclusive”, suggested that the Sanofi talks had failed.
Sanofi, which earlier this year lost out to Pfizer in the $14bn race to acquire Medivation, a US biotech company, declined to comment.
“It’s not like J&J walked out because they didn’t like [the company],” said one person briefed on the negotiations. “It was purely about the price.”
The person said that Alex Gorsky, chief executive of J&J, would remain disciplined on the price he was willing to pay, citing how the company lost out in the hotly contested auction of cancer specialist Pharmacyclics in 2015.
Several of J&J’s US have rivals declined to participate in any Actelion sale, preferring to delay investment decisions until Donald Trump becomes US president and proposes a much-anticipated plan to cut corporate taxes.
Such a plan could allow US companies to bring home tens of billions of dollars of cash trapped overseas, providing them with the firepower to pursue deals in the US, which is home to a much larger number of biotech groups.
However, J&J is under significant pressure to build up its pipeline quickly because its best-selling drug, the arthritis injection Remicade, now faces tough competition in the US. Remicade generated $5.3bn of sales in the first nine months of this year.
Last month, Pfizer launched a “biosimilar” version of the medicine, which is deemed by regulators to be as effective as the original product.
Zurich-traded shares in Actelion had finished 6.4 per cent higher at SFr215, before the disclosure of the renewed J&J talks. Shares in J&J were slightly lower at $115.5 in late New York trade, giving it a market value of $313bn.