Sanofi Talking to Actelion -- WSJ
14 December 2016 - 7:02PM
Dow Jones News
By Dana Mattioli and Jonathan D. Rockoff
French drug giant Sanofi SA is in talks for a deal with Actelion
Pharmaceuticals Ltd., according to people familiar with the matter.
Meanwhile, Johnson & Johnson abandoned its pursuit of the Swiss
drug company.
It's not clear what price Sanofi is discussing paying or what
structure is envisioned, but people familiar with the matter have
said a deal could value Actelion at as much as $30 billion.
J&J said earlier Tuesday it had bowed out of the bidding, a
move people familiar with the matter attributed to its
unwillingness to pay the price necessary to seal a deal for
Actelion. After J&J's announcement, Actelion issued its own
statement, saying it was "engaged in discussions with another
party" without giving more detail. People familiar with the matter
said the party is Sanofi, which recently lost a heated auction it
kicked off, for cancer biotech Medivation Inc.
Actelion, which has been resistant to takeover overtures in the
past, could ultimately decide to remain independent or strike a
deal that falls short of a full takeover. Likewise, Sanofi could
walk away if it also concludes that the price is too steep,
especially now that it doesn't have competition.
Like J&J, Sanofi would be interested in adding Actelion's
rare-disease drugs to an aging portfolio whose key products are
losing patent protection. A lower-price copy of Sanofi's
top-selling product, the insulin Lantus, is expected to go on sale
in the U.S. this month.
To offset the losses, Paris-based Sanofi recently tried to buy
Medivation, but rival Pfizer Inc. won the bidding in August, with a
$14 billion offer.
Actelion specializes in treatments for a rare disorder known as
pulmonary arterial hypertension. The Swiss drug company reported
revenue of 2.1 billion Swiss francs ($2.1 billion) and a profit of
552 million Swiss francs last year. The company had a market value
of more than $22 billion as of Tuesday's close, after surging in
recent weeks on investor hopes for a deal.
Sanofi has a rare-disease business, the result of its 2011
acquisition of Genzyme.
J&J has said it has several drugs in the late stages of
development with blockbuster-sales potential that could more than
offset the revenues lost as the company's rheumatoid-arthritis
therapy Remicade confronts a lower-price copy from Pfizer.
With a market value of more than $300 billion and about $40
billion in cash, J&J had the financial firepower to do a deal.
But Chief Executive Alex Gorsky and Chief Financial Officer Dominic
Caruso have said they would not overpay for acquisitions. J&J
lost out in an auction of Pharmacyclics, a cancer-drug company that
AbbVie Inc. ended up buying last year for $21 billion.
Unlike Pharmacyclics, Actelion was an imperfect fit for J&J,
which doesn't have a franchise selling rare-disease drugs.
It isn't the first time lately that a bid to seal a big drug
merger has fallen apart.
There have been more than $250 billion of health-care deals
announced so far in 2016, according to Dealogic, down from a total
of more than $500 billion in all of 2015.
Last year's tally would have been even greater if Pfizer's
roughly $150 billion agreement to buy drugmaker Allergan PLC hadn't
fallen apart amid resistance from the Obama administration. The
deal was to be a so-called inversion, moving Pfizer abroad for tax
purposes.
Indeed, resistance in Washington is one factor cited by deal
makers for the drop in merger activity in 2016.
Write to Dana Mattioli at dana.mattioli@wsj.com and Jonathan D.
Rockoff at Jonathan.Rockoff@wsj.com
(END) Dow Jones Newswires
December 14, 2016 02:47 ET (07:47 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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