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J&J to buy Actelion for $30B, spin out R&D unit

It is official: Johnson & Johnson is set to acquire Actelion Ltd. for $30 billion, or $280 per share.

The U.S.-based pharmaceutical giant will launch an all-cash tender offer in Switzerland to acquire all of the outstanding shares of Actelion in a transaction that is expected to be immediately accretive to Johnson & Johnson's adjusted earnings per share and accelerate J&J revenue and earnings growth rates. J&J will fund the transaction with cash held outside the U.S.

Before the acquisition closes, the Swiss biotech company will spin out its drug discovery operations and early-stage clinical development assets into a new biopharmaceutical company, shares of which will be listed on the SIX Swiss Exchange. The new research and development company's shares will be distributed to Actelion shareholders as a stock dividend upon closing of the tender.

Actelion CEO Jean-Paul Clozel and Chairman Jean Pierre Garnier will lead the R&D entity as CEO and chairman, respectively, along with Actelion's current scientific team.

Johnson & Johnson will initially hold 16% of the new company, while also having rights to an additional 16% of its equity through a convertible note. The new company will launch with cash of CHF1 billion to be made available at the closing of the transaction. J&J will also receive an option on R&D NewCo's ACT-132577, a product in phase 2 development for resistant hypertension.

Actelion's products for pulmonary arterial hypertension are "highly complementary" to the existing portfolio of Johnson & Johnson's Janssen Pharmaceutical Companies, according to a news release. Johnson & Johnson said it expects to retain Actelion's presence in Switzerland.

The acquisition, unanimously approved by the boards of both companies, is expected to close by the end of the second quarter.

The transaction is conditioned upon: At least 67% of all Actelion shares that are issued and outstanding at the end of the offer period, which may be extended, tendering into the offer; approval of Actelion shareholders of the distribution of the shares of the R&D company; and further customary conditions and regulatory approvals.

Lazard is acting as lead financial adviser to Johnson & Johnson with Citibank also providing financial advice on certain matters. Cravath Swaine & Moore LLP, Homburger AG and SextonRiley LLP are Johnson & Johnson's legal advisers for the deal.

Bank of America Merrill Lynch is serving as Actelion's lead financial adviser with Credit Suisse also providing financial advice. Niederer Kraft & Frey, Wachtell Lipton Rosen & Katz and Slaughter & May are Actelion's legal advisers.