Johnson & Johnson (J&J) has agreed to acquire Actelion, an Allschwil, Switzerland-based biopharmaceutical company, in a deal valued at $30 billion and will spin out Actelion’s research and development unit as a standalone company to be listed on the Swiss stock exchange (SIX Swiss Exchange) in which J&J will hold a minority stake.

J&J will launch an all-cash tender offer in Switzerland for all outstanding shares of Actelion for $280 per share, payable in US dollars, which equates to CHF 280.08 per share as of January 25, 2017. J&J will fund the transaction with cash held outside the United States. The transaction was unanimously approved by the boards of directors of both companies.

Actelion specializes in the field of pulmonary arterial hypertension (PAH), a chronic disorder characterized by abnormally high blood pressure in the arteries between the heart and lungs. The PAH franchise leads Actelion’s product sales and encompasses oral, inhaled, and intravenous formulations of compounds for patients at various stages of the disease and had 2015 sales of CHF 2.042 billion ($2.038 billion). Actelion’s PAH franchise sales were driven by its top-selling product, Tracleer (bosentan), an orally available endothelin receptor antagonist for treating PAH, which posted 2015 sales of CHF 1.212 billion ($1.209 billion).

Actelion’s PAH franchise also includes Opsumit (macitentan)‎, Uptravi (selexipag)‎, Veletri (epoprostenol), and Ventavis (iloprost), which expand the portfolio of Janssen Pharmaceuticals, the pharmaceutical operations of J&J, in the cardiovascular and metabolic therapeutic area. Actelion’s other marketed products include Valchlor (mechlorethamine)‎, for treating Stage IA and IB mycosis fungoides-type cutaneous T-cell lymphoma, and Zavesca (miglustat), for treating mild to moderate type I Gaucher disease, ponesimod, a sphingosine-1-phosphate receptor 1 receptor modulator in Phase III development for treating multiple sclerosis, and cadazolid, an antibiotic in Phase III development for treating Clostridium difficile-associated diarrhea.

As part of the transaction, immediately prior to the completion of the acquisition, Actelion will spin out its drug-discovery operations and early-stage clinical development assets into a newly created Swiss biopharmaceutical company, R&D NewCo. The shares of R&D NewCo, which will be listed on the SIX Swiss Exchange, will be distributed to Actelion’s shareholders as a stock dividend upon closing of the tender. J&J will initially hold 16% of the shares of R&D NewCo and have rights to an additional 16% of R&D NewCo equity through a convertible note. The arrangements will result in R&D NewCo launching with cash of CHF 1 billion ($1 billion) to be made available at the closing of the transactions. J&J will also receive an option on a product within R&D NewCo, ACT-132577, currently in Phase II clinical development for treating resistant hypertension.

R&D NewCo will be led by Actelion’s current scientific team with Jean-Paul Clozel, MD, chief executive officer (CEO) and founding member of Actelion, as CEO of R&D NewCo. Jean Pierre Garnier, chairman of the board of Actelion, will be chairman of the board of R&D NewCo. R&D NewCo will have a broad portfolio of drug candidates in clinical development across four focused therapeutic franchises: specialty cardiovascular disorders, central nervous system disorders, immunological disorders, and orphan diseases.

The acquisition also extends Actelion products’ geographic and commercial reach through J&J’s global presence and commercial capabilities that will open new markets for Actelion’s in-market products. In addition, J&J’s network will provide additional support for the launches of Actelion’s late-stage therapies.

The transaction is expected to close by the end of the second quarter of 2017. J&J intends to file a prospectus and commence the tender offer by mid-February 2017. In addition, Actelion will convene an extraordinary general meeting (EGM) for shareholders to approve the distribution of shares of R&D NewCo by way of a dividend in kind to Actelion’s shareholders upon closing of the tender offer. The EGM is expected to be held in the second quarter of 2017.

The transaction is subject to the following conditions: at least 67% of all Actelion shares are issued and outstanding at the end of the offer period, which may be extended, tendering into the offer; the approval of the Actelion shareholders of the distribution of the shares of R&D NewCo at the EGM called for this purpose; and further customary offer conditions described in the offer prospectus, including regulatory approvals.

Tax clearances in relation to the spin-off of R&D NewCo have been received from both the Swiss Federal and the Basel-Landschaft cantonal tax authorities. Jean-Paul Clozel has committed to tender all Actelion shares he owns into the offer and vote his shares in favor of the transaction at the EGM. Actelion’s board of directors unanimously recommends that Actelion shareholders tender their shares into the offer and vote in favor of the distribution of shares at the EGM.

Actelion is prepared to pay the price per tendered share to the retail shareholders in Swiss francs and therefore provide a wholesale exchange facility. The exchange facility shall be provided only to persons who hold their Actelion shares in a bank deposit in Switzerland, and who hold no more than 1,000 shares each.

Source: Johnson & Johnson