J&J Announces EU Regulatory Approval For Actelion Deal

Johnson & Johnson (NYSE:JNJ) has received a regulatory approval from the European Commission (EC), thus completing all necessary formalities to close the pending acquisition of Swiss biopharmaceutical company, Actelion Ltd. (OTC:ALIOF) .

The acquisition was originally announced by J&J in January this year for $280 per share, amounting to approximately $30.0 billion.

J&J expects the settlement of all-cash public tender offer on Jun 16 subject to the demerger, antitrust clearance and other customary closing conditions. The acquisition is expected to diversify J&J’s revenues to pulmonary arterial hypertension (PAH) therapeutic category and bolster its long-term growth.

J&J’s shares have outperformed the Zacks classified Large Cap Pharma industry so far this year. The company’s shares have rallied 14.2% compared with the industry’s gain of 10.8%.



Per agreement terms, soon before the acquisition’s completion, Actelion will spin out its drug discovery operations and early-stage clinical development assets into a newly created Swiss biopharmaceutical company, Idorsia. The shares of Idorsia, which will be listed on the Swiss Exchange (SIX), will be distributed to Actelion’s shareholders as a stock dividend upon the tender’s closing.

As previously announced, J&J will initially hold Idorsia’s 9.9% shares and have rights to an additional 32% of its equity through a convertible note.

Investors must be reminded that J&J’s key areas of focus include immunology, infectious diseases & vaccines, neuroscience, cardiovascular & metabolism and oncology, while a sixth therapeutic area -- pulmonary arterial hypertension -- will be added after the completion of Actelion acquisition.

Zacks Rank & Key Picks

J&J currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in healthcare sector include VIVUS, Inc. (NASDAQ:VVUS) and Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) . While VIVUS sports a Zacks Rank #1 (Strong Buy), Regeneron carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

VIVUS’s loss per share estimates narrowed from 50 cents to 39 cents for 2017 in the last 60 days. The company posted positive earnings surprises in all four trailing quarters, with an average beat of 233.69%.

Regeneron’s earnings per share estimates increased from $10.16 to $10.52 for 2017 and from $10.90 to $12.10, over last 60 days. The company posted positive earnings surprises in two of the four trailing quarters with average beat of 0.45%.

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