Deals, Drug Development, M&A

Will J&J come up with a big enough treasure trove to win an Actelion buyout?

Jean-Paul Clozel

Jean-Paul Clozel, Actelion CEO

J&J and Actelion have made it official. The pharma giant is involved in talks to acquire the Swiss biotech, which had a market cap of $16.4 billion, before word of the buyout talks first surfaced in Bloomberg.

“There can be no assurance any transaction will result from these discussions,” notes J&J $JNJ , which could easily require up to a 50% premium to complete a deal like this. Actelion’s market cap, meanwhile, surged to about $20 billion as investors bet that a deal would come through.

CEO Jean-Paul Clozel, who split away from Roche to establish the company, a specialist in pulmonary arterial hypertension, has spent years pooh-poohing talks about a potential buyout. But Actelion (SIX: ATLN) has also been a constantly cited takeover target for the likes of J&J and Sanofi, which would both  be attracted by rising sales for new products Opsumit and Uptravi, which have come online as Tracleer revenue has begun to fade.

Clozel isn’t likely to give up his company without battling for a big payout. He’s squared off against a shareholders revolt in the past and stuck to his guns on the company’s R&D strategy, which has paid off handsomely.

“Similar deals have been at a 40+% premium and we view CHF240/share as a possible floor takeout value,” notes Jefferies Peter Welford today. “We still view 2H17-18E as perhaps a more likely timeline and see hurdles to an agreed deal, but the highly profitable and long lifecycle PAH franchise is likely attractive.”

“We at Actelion–the board of directors, the management, the employees–are all building a company and not thinking about being sold the next day,” Clozel told Bloomberg back in the spring. “If we want to continue to create shareholder value, the best for us is to remain independent.”

J&J management, which has its own sound reasons for paying top dollar for the company, may persuade him otherwise. But they’re also likely to take their time on getting a deal done, especially if Clozel throws up the barricades.


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