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J&J Resumes Talks with Actelion: Did Sanofi Just Lose Out?
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In an interesting turn of events, Johnson & Johnson (JNJ - Free Report) announced that it is once again discussing a possible transaction with Swiss biotechnology company Actelion Ltd. . Note that this announcement comes just a week after the two companies disclosed that they have ended earlier talks.
Last month, J&J confirmed that it had approached Actelion with a takeover offer, soon after Bloomberg mentioned in a report that the companies were holding initial talks. (Read More: J&J Confirms it Approached Actelion for Possible Deal)
J&J had issued a press release, saying that it is “engaged in preliminary discussions” with Actelion regarding a possible merger. Reportedly, J&J had even raised its bid after Actelion expressed dissatisfaction over the earlier price.
Last week, the company announced that it has ended talks with Actelion regarding a possible transaction reportedly after they were unable to reach an agreement over the purchase price. (Read More: J&J Ends Deal Talks with Actelion: Will Sanofi Gain?). However, once again, on Wednesday, J&J disclosed in a press release that it has entered into “exclusive negotiations” with Actelion regarding a possible strategic deal.
Shares of Actelion were up more than 5% on Wednesday, while J&J’s stock declined slightly. Since the first announcement, J&J’s shares have gained 1%, which compared unfavorably with the return of 1.7% for the Zacks categorized Large-Cap Pharma industry.
Meanwhile, rumors were rife that French pharma giant Sanofi (SNY - Free Report) was also interested in buying Actelion. After J&J dropped out last week, Sanofi was seemed close to disclosing a deal. It was speculated that Sanofi could pay as much as $30 billion for Actelion. Now though, it seems like Sanofi has lost out on the deal after all.
We note that Actelion has been a popular takeover target mainly because of its rare disease portfolio. It’s a leader in the pulmonary arterial hypertension (PAH) market with key drugs like Opsumit, Tracleer, Ventavis, Veletri and Uptravi. The newer drugs – Opsumit and Uptravi – have all been well received and are even poised to become blockbuster products soon. These could compensate for the lost revenues from its older PAH medicine, Tracleer, which is facing competitive pressure.
Note that Actelion has consistently outperformed the Zacks categorized Medical-Biomedical/Genetics industry year to date, with the stock gaining 56.9%, while the industry declined 25.3%.
A deal with Actelion will diversify both the companies’ revenues, while boosting their pipelines. Note that J&J’s top line is under significant pressure due to generic competition for quite a few products in its portfolio, especially, biosimilar competition for its blockbuster arthritis drug Remicade. At the third-quarter conference call, when asked about its acquisition plans, J&J hinted that the company was interested in adding another major therapeutic area to its existing portfolio of five. Thus, the strategic deal with Actelion would be in line with J&J’s interest.
Meanwhile, Sanofi is equally focused on broadening its drug portfolio given its sales are under pressure due to a struggling Diabetes franchise, generic competition and slower-than-expected uptake of new products like Praluent. Having lost out on the Medivation acquisition to Pfizer, Inc. (PFE - Free Report) this year, a deal with Actelion would have broadened Sanofi’s portfolio significantly.
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J&J Resumes Talks with Actelion: Did Sanofi Just Lose Out?
In an interesting turn of events, Johnson & Johnson (JNJ - Free Report) announced that it is once again discussing a possible transaction with Swiss biotechnology company Actelion Ltd. . Note that this announcement comes just a week after the two companies disclosed that they have ended earlier talks.
Last month, J&J confirmed that it had approached Actelion with a takeover offer, soon after Bloomberg mentioned in a report that the companies were holding initial talks. (Read More: J&J Confirms it Approached Actelion for Possible Deal)
J&J had issued a press release, saying that it is “engaged in preliminary discussions” with Actelion regarding a possible merger. Reportedly, J&J had even raised its bid after Actelion expressed dissatisfaction over the earlier price.
Last week, the company announced that it has ended talks with Actelion regarding a possible transaction reportedly after they were unable to reach an agreement over the purchase price. (Read More: J&J Ends Deal Talks with Actelion: Will Sanofi Gain?). However, once again, on Wednesday, J&J disclosed in a press release that it has entered into “exclusive negotiations” with Actelion regarding a possible strategic deal.
Shares of Actelion were up more than 5% on Wednesday, while J&J’s stock declined slightly. Since the first announcement, J&J’s shares have gained 1%, which compared unfavorably with the return of 1.7% for the Zacks categorized Large-Cap Pharma industry.
Meanwhile, rumors were rife that French pharma giant Sanofi (SNY - Free Report) was also interested in buying Actelion. After J&J dropped out last week, Sanofi was seemed close to disclosing a deal. It was speculated that Sanofi could pay as much as $30 billion for Actelion. Now though, it seems like Sanofi has lost out on the deal after all.
We note that Actelion has been a popular takeover target mainly because of its rare disease portfolio. It’s a leader in the pulmonary arterial hypertension (PAH) market with key drugs like Opsumit, Tracleer, Ventavis, Veletri and Uptravi. The newer drugs – Opsumit and Uptravi – have all been well received and are even poised to become blockbuster products soon. These could compensate for the lost revenues from its older PAH medicine, Tracleer, which is facing competitive pressure.
Note that Actelion has consistently outperformed the Zacks categorized Medical-Biomedical/Genetics industry year to date, with the stock gaining 56.9%, while the industry declined 25.3%.
A deal with Actelion will diversify both the companies’ revenues, while boosting their pipelines. Note that J&J’s top line is under significant pressure due to generic competition for quite a few products in its portfolio, especially, biosimilar competition for its blockbuster arthritis drug Remicade. At the third-quarter conference call, when asked about its acquisition plans, J&J hinted that the company was interested in adding another major therapeutic area to its existing portfolio of five. Thus, the strategic deal with Actelion would be in line with J&J’s interest.
Meanwhile, Sanofi is equally focused on broadening its drug portfolio given its sales are under pressure due to a struggling Diabetes franchise, generic competition and slower-than-expected uptake of new products like Praluent. Having lost out on the Medivation acquisition to Pfizer, Inc. (PFE - Free Report) this year, a deal with Actelion would have broadened Sanofi’s portfolio significantly.
Both J&J and Actelion have a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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 >>