Johnson & Johnson (NYSE:JNJ) is reportedly in preliminary discussions to buy Actelion Pharmaceuticals (VTX:ATLN) in a deal estimated to be as high as $247 (250 Swiss francs) per share, although the European biotech said there is no guarantee the deal will go through.
J&J’s CEO Alex Gorsky said this year that the company is interested in deals to expand its medical device and pharmaceuticals segments, according to Reuters, evidenced by its $4.33 billion buy of Abbott Laboratories’ eye care business in September.
Allschwil, Switzerland-based Actelion’s drugs, Opsumit and Uptravi, treat high pressure in blood vessels to the lungs. Analysts forecast the 2 could generate more than $4.6 billion in 2020 sales, up from an estimated $1.4 billion this year. The company’s pipeline focuses on treatments for rare diseases, making it an attractive takeover target for buyers on the lookout for candidates with less pricing pressure.
Actelion shares soared on Friday, up +19% to a peak of 187.70 Swiss francs, which put the company at a value of $20 billion. J&J shares finished up +1% at $144.13 apiece.
Actelion co-founder and CEO Jean-Paul Clozel has repeatedly asserted that he wants the company to remain independent, like in 2011 when he allied shareholders against an investor’s campaign to put the firm up for sale. Since then, Actelion’s shares have more than tripled. The desire to remain independent in combination with the high value of recent deals in the pharma sector will drive up the takeover price for J&J, analysts told Reuters.
If J&J fails to make a deal, it is likely another company such as Sanofi (NYSE:SNY) or Novartis (NYSE:NVS) will step in and make a bid, analysts predicted. Neither company has made an official statement about its interest in Actelion.
Some, like Bank Vontobel analyst Stefan Schneider, doubted any deal will go through at all, especially if the buyer shows interest in messing with Clozel’s pipeline. “We don’t see how the CEO would part from the pipeline where he sees the value for Actelion to transform into the first European large-cap biotech company,” Schneider told Reuters.
Others speculated that as Clozel gets older he may become more interested in handing over the reins, especially if a buyer agrees to maintain the company’s presence in Basel alongside pharma giants Roche (PINK:RHHBY) and Novartis.
“Even when Clozel has always made the case for independence, it’s possible a stock price at its zenith, combined with his 61 years, could prompt a change of heart,” Zuercher Kantonalbank analyst Michael Nawrath told the news outlet.