In a sign that a deal could be close to being struck, healthcare products giant Johnson & Johnson (NYSE:JNJ) has reportedly upped its takeover offer for European biotech giant Actelion.
The move follows Friday’s news that J&J was pursuing an acquisition of Actelion, which is a specialist maker of blood pressure drugs. From Bloomberg:
Johnson & Johnson, the world’s biggest maker of health-care products, raised its takeover offer for Actelion as negotiations with Europe’s largest biotech firm progress, according to people familiar with the matter, Bloomberg News reports.
An acquisition won’t come easily, however. Actelion has repeatedly rebuffed takeover attempts in recent years. From the WSJ:
The Swiss company fought off an attempt by Elliott Management to force it into a sale in 2011, and a reported bid by Shire last year. That has had reasonable results for shareholders. Elliott thought Actelion could fetch 70 Swiss francs a share, less than half its current value. Shire’s approach, reported by The Sunday Times of London, would also have been below the current share price.
A deal certainly won’t come cheaply. Thomson Reuters Eikon notes that Actelion currently trades at 20 times forward earnings estimates, versus a sector average of just 13 times. What’s more, the company would likely want to see significant upside to its current $18.5 billion valuation in a takeover bid.
How much remaining upside there is left remains to be seen, but it’s clear that JNJ is intent on getting a deal done soon.
Johnson & Johnson shares fell $0.93 (-0.82%) to $112.20 in Tuesday morning trading. JNJ has gained 9.29% year-to-date, putting the stock roughly in-line with the benchmark S&P 500 index during the same period.