Johnson & Johnson in talks to buy Dutch biotech firm Crucell for $2.3 billion

By Toby Sterling, AP
Friday, September 17, 2010

Johnson & Johnson plans to buy Crucell for $2.3B

AMSTERDAM — Johnson & Johnson said Friday it is in advanced talks to acquire Dutch biotech company Crucell NV for €1.75 billion ($2.29 billion), a deal that would boost the American health care product maker’s vaccine business.

In a joint statement, the companies said Johnson & Johnson, which already owns a 17.9 percent stake in Crucell, intends to offer €24.75 per share in cash for the remainder — a 58 percent premium to Crucell’s closing price Thursday of €15.70.

Shares in Crucell, whose board will recommend the offer to stockholders, jumped 56 percent to €24.41 in Amsterdam.

“The companies expect that Crucell’s strength in the manufacture, discovery and commercialization of vaccines would create a strong platform for Johnson & Johnson in the vaccine market,” the companies said.

Johnson & Johnson, headquartered in New Brunswick, N.J., has about $64 billion in annual sales and is the world’s biggest and most broadly based health care company, with products ranging from Band-Aids and baby shampoo to contact lenses and contraceptives.

While it has a strong biotech business with its Centocor division, it’s new to the vaccine market and has been looking to grow its business.

Last year it bought both its Crucell stake and an 18 percent stake in Irish biotech company Elan Corp., which is developing an Alzheimer vaccine and treatment.

Crucell’s biggest-selling vaccine is Quinvaxem, which protects against five childhood diseases. But it has a number of interesting vaccines and treatments under development.

Last year it was awarded a $69 million U.S. government grant for developing a universal treatment for the flu, including strains resistant to Tamiflu — the medicine most commonly used to slow influenza infections.

Crucell, based in Leiden, Netherlands, is also working on a treatment for people infected with rabies and an HIV vaccine.

“It’s a fair price, but not a top price,” said Rabobank Securities analyst Fabian Smeets. He said that J&J’s stake had given it the inside track in negotiating a deal with Crucell, and other big pharmaceuticals firms were not likely to launch a rival bid.

“There’s always a chance, but I consider it pretty small,” he said, citing change-of-control clauses that J&J has already signed with Crucell.

In addition to its vaccine business, Crucell sells a line of human cells widely used by big pharmaceutical firms as a platform for developing vaccines.

J&J bought its stake in Crucell last year shortly after Wyeth had dropped a bid for Crucell when it was itself acquired by Pfizer Inc.

Crucell Chief Executive Ronald Brus said that at the time J&J took a stake, his company hadn’t wanted to form partnerships with the existing vaccine giants.

“You want to partner with the one that wants to enter the market, not the ones that want to defend their market,” he said.

Giles Somers, an analyst at Datamonitor, said the buyout of Crucell is a good fit for J&J, citing other moves the company has made into expanding its role in infectious diseases. He noted “vaccines are increasingly regarded as a key revenue generator for Big Pharma, as they are generics-proof.”

“Furthermore, backed by J&J’s global sales and marketing capabilities, Crucell could compete more effectively with the Big Pharma players already in the vaccines space,” he said.

Shares of J&J rose 28 cents, or 0.5 percent, to close Friday at $61.57.

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