A Johnson & Johnson building is shown in Irvine, California

New York - Johnson & Johnson agreed to buy Actelion for $30 billion and spin off the Swiss drugmaker’s research and development operations, clinching its largest deal ever to become a leader in medicines treating a rare type of high blood pressure.

J&J, already the world’s biggest maker of health-care products, is fulfilling its goal of adding a new drug category with the transaction and dealing a blow to France’s Sanofi, which had also sought to acquire Actelion. The deal is expensive compared to recent industry takeovers such as Pfizer Inc.’s acquisition of Medivation and AbbVie’s purchase of Pharmacyclics, according to an analysis from Bloomberg Intelligence.

J&J will begin a tender offer to buy shares of Allschwil, Switzerland-based Actelion for $280 each in cash, the companies said in a statement. The price, which equals 280.08 Swiss francs, is 23 percent above Wednesday’s closing level. The R&D operations will be spun off to Actelion shareholders as a new publicly traded company, with J&J keeping a 16 percent stake.

The deal caps weeks of discussions interrupted for several days after New Brunswick, New Jersey-based J&J walked away on December 13, only to return to the negotiating table about a week later. Access to Actelion’s drugs Tracleer, Opsumit and Uptravi, which all treat life-threatening pulmonary arterial hypertension, will make J&J a leader in treating the disease and help it expand beyond autoimmune, heart and cancer drugs.

Shares rally

Actelion shares surged as much as 22 percent in Zurich. They were up 21 percent to 275 francs at 9:21 a.m., after having climbed 68 percent since early November. J&J ended Wednesday at $112.80 in New York, capping a 11.5 percent increase in the past year.

Meanwhile, Sanofi is left empty-handed for the second time after losing out on cancer treatment maker Medivation Inc. to another US giant, Pfizer Inc., in August. 

Actelion was founded 20 years ago by CEO Jean-Paul Clozel, his wife Martine Clozel and a team of scientists who split from Roche Holding. The discovery of the blockbuster Tracleer propelled it over a decade ago to becoming a leader in the treatment of pulmonary arterial hypertension. Uptravi and Opsumit followed and are set to replace Tracleer, which has lost patent protection and faces challenges from copycat drugs.

Clozel, who is among Actelion’s largest shareholders, had said in the past he wanted the company to remain independent. The CEO is a believer in Actelion’s pipeline of experimental medicines, and he and his wife have resisted takeover bids over the years.

Clozel’s role

Clozel will now lead the new R&D company as CEO, while Actelion Chairman Jean Pierre Garnier heading the board. Shares in the business, which will be listed on the Six Swiss exchange, will be distributed to shareholders as a dividend. As part of the deal, J&J will have rights to an additional 16 percent of the business through a convertible note, as well as an option on ACT-132577, a product being developed for resistant hypertension.

The mid-stage assets in the new company may be worth between 5 and 10 Swiss francs a share, analysts at Jefferies in London wrote in a note to clients.

Before walking away, J&J had made Actelion an offer that it later increased to about $260 a share, people familiar with the situation have said, valuing the Swiss biotech at about $28 billion. Paris-based Sanofi entered with its own proposal of about $275 a share, which included a so-called contingent value right, or CVR, for Actelion stockholders that would pay out depending on the performance of certain pipeline drugs, according to people familiar with the offer. Those talks faltered amid complications over the CVR, the people said.

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The new deal will immediately start adding to J&J’s earnings when the transaction in completed by the end of the second quarter, the companies said. The US behemoth expects the transaction to boost its long-term profit growth by as much as 2 percent over analysts’ expectations.

Tender offer

Lazard is lead financial adviser to Johnson & Johnson with Citigroup Inc. also providing advice. Cravath, Swaine & Moore, Homburger and SextonRiley are J&J’s legal advisers. Bank of America Corp. is Actelion’s lead adviser, with Credit Suisse Group AG also providing advice. Niederer Kraft & Frey, Wachtell Lipton, Rosen & Katz, and Slaughter & May are legal advisers to Actelion.

The boards of both companies have approved the deal; the closing is now pursuant to at least 67 percent of Actelion shares being tendered by its holders when the offer begins in mid-February. J&J plans to fund the takeover with cash held outside the US.

The companies plan to hold a press conference at 1 p.m. local time at Actelion’s headquarters in Allschwil, and a call with investors an hour later, at 8 a.m. New York time.

Bloomberg