We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
J&J to Acquire Actelion for $30B: Is It a Strategic Fit?
Read MoreHide Full Article
After months of negotiations, healthcare giant Johnson & Johnson (JNJ - Free Report) has finally entered into a definitive agreement to acquire Swiss biotech Actelion Ltd for $280 per share in an all-cash transaction. This amounts to an aggregate value of $30 billion.
While Actelion’s shares surged nearly 20% on Thursday, J&J’s shares dipped almost 1% on the news. In fact, over the past one-year period, while the Zacks classified Drugs industry declined 6.8%, shares of J&J’s climbed 9.5% and that of Actelion shot up almost 102%.
Creation of R&D NewCo
Following the transaction, Actelion will spin off its drug discovery operations and early-stage clinical development assets into a new biopharmaceutical company – R&D NewCo – with cash of CHF 1 billion. The new entity will be listed on the SIX Swiss Exchange (SIX).
The transaction is slated to close by the end of the second quarter of 2017, upon certain customary offer conditions.
How the Acquisition Benefits J&J
Actelion has often been considered an attractive takeover target for long mainly due to its rare disease portfolio. In addition to holding a strong position in the PAH market, Actelion’s portfolio has treatments approved in certain countries for specialist diseases like type I Gaucher disease, Niemann-Pick type C disease, digital ulcers in patients suffering from systemic sclerosis, and mycosis fungoides type cutaneous T-cell lymphoma.
The Actelion buyout will diversify J&J’s revenues and boost its top line. The deal will expand its pharma subsidiary, Janssen’s portfolio with Actelion’s established pulmonary arterial hypertension (PAH) franchise which comprises key drugs like Opsumit, Tracleer, Ventavis, Veletri and Uptravi.
J&J will also acquire Actelion's other marketed products, including Valchlor and Zavesca as well as global rights to the latter’s two late-stage candidates – ponesimod (multiple sclerosis) and cadazolid (for Clostridium difficile-associated diarrhea).
Moreover, J&J will initially own 16% of the shares of R&D NewCo, with rights to an additional 16% through convertible notes. J&J will also receive an option to acquire rights to ACT-132577, currently in phase II development for the treatment of resistant hypertension.
The healthcare giant expects the deal to boost its long-term revenue and earnings growth rates by at least 1% and 1.5–2.0%, respectively, above the current analyst consensus. Also, EPS accretion in the first full year is expected in the range of 35 cents to 40 cents.
The addition of Actelion's specialty in-market medicines and late-stage products is consistent with J&J's efforts to grow in attractive and complementary therapeutic areas, and serve patients with serious illnesses and significant unmet medical need.
Zacks Rank & Key Picks
Both J&J and Actelion carry a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the health care sector include Sunesis Pharmaceuticals, Inc. and Anika Therapeutics Inc. (ANIK - Free Report) . While Sunesis sports a Zacks Rank #1 (Strong Buy), Anika is a Zacks Rank #2 (Buy) stock. You can see the complete list of today’s Zacks #1 Rank stocks here.
Sunesis’ loss estimates narrowed 5.06% and 8.80% for 2016 and 2017, respectively, over the past 60 days. The company recorded a positive earnings surprise in three of the last four quarters, the average being 0.54%.
Anika’s earnings estimates for 2016 and 2017 were up 3.9% and 0.5%, respectively, over the last 60 days. The company recorded a positive earnings surprise in each of the last four quarters, the average being 33.14%.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
J&J to Acquire Actelion for $30B: Is It a Strategic Fit?
After months of negotiations, healthcare giant Johnson & Johnson (JNJ - Free Report) has finally entered into a definitive agreement to acquire Swiss biotech Actelion Ltd for $280 per share in an all-cash transaction. This amounts to an aggregate value of $30 billion.
While Actelion’s shares surged nearly 20% on Thursday, J&J’s shares dipped almost 1% on the news. In fact, over the past one-year period, while the Zacks classified Drugs industry declined 6.8%, shares of J&J’s climbed 9.5% and that of Actelion shot up almost 102%.
Creation of R&D NewCo
Following the transaction, Actelion will spin off its drug discovery operations and early-stage clinical development assets into a new biopharmaceutical company – R&D NewCo – with cash of CHF 1 billion. The new entity will be listed on the SIX Swiss Exchange (SIX).
The transaction is slated to close by the end of the second quarter of 2017, upon certain customary offer conditions.
How the Acquisition Benefits J&J
Actelion has often been considered an attractive takeover target for long mainly due to its rare disease portfolio. In addition to holding a strong position in the PAH market, Actelion’s portfolio has treatments approved in certain countries for specialist diseases like type I Gaucher disease, Niemann-Pick type C disease, digital ulcers in patients suffering from systemic sclerosis, and mycosis fungoides type cutaneous T-cell lymphoma.
The Actelion buyout will diversify J&J’s revenues and boost its top line. The deal will expand its pharma subsidiary, Janssen’s portfolio with Actelion’s established pulmonary arterial hypertension (PAH) franchise which comprises key drugs like Opsumit, Tracleer, Ventavis, Veletri and Uptravi.
J&J will also acquire Actelion's other marketed products, including Valchlor and Zavesca as well as global rights to the latter’s two late-stage candidates – ponesimod (multiple sclerosis) and cadazolid (for Clostridium difficile-associated diarrhea).
Moreover, J&J will initially own 16% of the shares of R&D NewCo, with rights to an additional 16% through convertible notes. J&J will also receive an option to acquire rights to ACT-132577, currently in phase II development for the treatment of resistant hypertension.
The healthcare giant expects the deal to boost its long-term revenue and earnings growth rates by at least 1% and 1.5–2.0%, respectively, above the current analyst consensus. Also, EPS accretion in the first full year is expected in the range of 35 cents to 40 cents.
The addition of Actelion's specialty in-market medicines and late-stage products is consistent with J&J's efforts to grow in attractive and complementary therapeutic areas, and serve patients with serious illnesses and significant unmet medical need.
Zacks Rank & Key Picks
Both J&J and Actelion carry a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the health care sector include Sunesis Pharmaceuticals, Inc. and Anika Therapeutics Inc. (ANIK - Free Report) . While Sunesis sports a Zacks Rank #1 (Strong Buy), Anika is a Zacks Rank #2 (Buy) stock. You can see the complete list of today’s Zacks #1 Rank stocks here.
Sunesis’ loss estimates narrowed 5.06% and 8.80% for 2016 and 2017, respectively, over the past 60 days. The company recorded a positive earnings surprise in three of the last four quarters, the average being 0.54%.
Anika’s earnings estimates for 2016 and 2017 were up 3.9% and 0.5%, respectively, over the last 60 days. The company recorded a positive earnings surprise in each of the last four quarters, the average being 33.14%.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>