Johnson & Johnson closed $30bn deal with Swiss Actelion

7 years ago - Published in Finance, Fundamental Analysis

Johnson & Johnson will buy Swiss drugmaker Actelion in a $30 billion deal that both secures promising research and bolsters the product portfolio controlled by the U.S. health care giant.

The deal between the world's biggest producer of healthcare goods and Actelion, a leader in medicines treating high blood pressure, will create a new Swiss-listed firm called R&D NewCo focusing on the research and development of new drugs, the two companies said in a joint statement.
The U.S. conglomerate will then buy Actelion's seven drugs that are currently on the market and two potential treatments in late-stage testing. 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.

Actelion CEO Jean-Paul Clozel said the new R&D company would "allow us to continue with our successful culture of innovation", while Johnson & Johnson's CEO and chairman Alex Gorsky said in a statement that the acquisition of Actelion offered "compelling value" to shareholders in both companies.

J&J will own 16% of the new, stand-alone business, which will be based in Switzerland, and have rights to an additional 16%.

The deal comes a little more than a month after J&J said it had ended talks to buy Actelion, and the Swiss company had said it was in discussions with another party.

Actelion, founded in 1997, specializes in treatments for pulmonary arterial hypertension, which is high blood pressure in the arteries between the heart and lungs. Its products include Tracleer, an oral treatment sold in 60 markets.

J&J Chairman and CEO Alex Gorsky told analysts Thursday that mergers and acquisitions were an important part of the company's growth strategy and have historically made up about half its growth.

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

Johnson & Johnson has some 127,000 employees, operating the world's biggest medical device business as well as a huge pharmaceutical and consumer products wing that covers everything from baby products to band-aids.