Thursday morning it was announced that Johnson & Johnson has made an offer to acquire Actelion, after negotiations were called off, and restarted, in November last year. The recent M&A is good news for Arctic Aurora LifeScience, which has a 2.4% position of Actelion in the fund’s portfolio, in a year that is expected to see more M&A deals to come.
U.S. healthcare giant Johnson & Johnson will acquire Actelion, Europe’s largest biotech company. The $30 billion all-cash deal gives J&J access to the Swiss group's line-up of high-price, high-margin medicines for rare diseases, helping it diversify its drug portfolio as its largest product, Remicade for inflammatory diseases, will face increasing low-cost generic competition.
"What is pretty unique about the deal, is that Actelion shareholders gets both an all cash tender offer at $280 per share, and shares in a new R&D company that brings with it all of Actelion's early-stage R&D division," portfolio manager in Arctic Aurora LifeScience, Dr. Torbjørn Bjerke, explains. "The new company will be listed in Switzerland with its existing management at the helm. J&J meanwhile has ‘options’ in selected projects that may create value for the new company as well as equity holders."
The offer to pay $280 per share, following weeks of exclusive talks, was unanimously approved by the boards of directors of both companies. The deal represents a 23 percent premium to Actelion's closing price on Wednesday of 227.4 Swiss francs. Actelion shares were up more than 20 percent higher when markets opened Thursday.
Actelion will spin off its drug-discovery operations into a separate company called R&D NewCo , and Johnson & Johnson will initially hold 16% of the shares of the new company, with an option to acquire another 16%.
The investment by the team in Actelion, was much based on the case of the company being a take-over candidate. Yet again, the team was correct in their assumption in the eagerness of "big pharma" having an appetite for a company like Actelion. This was also the case for the companies Vitae and Array whom both were acquired during second half of 2016. With regards 2017 – more are expected in the time to come.
Arctic Aurora LifeScience is an equity fund investing in global biotechnology and pharmaceutical companies. The fund is run by former portfolio manager in the Swedish AP Fonder, Ulrica Bjerke, and Dr. Torbjørn Bjerke, both with 20 years of experience from the market. Arctic Aurora LifeScience was launched in May 2016 with both hedged and un-hedged share classes.
Past performance in Arctic Aurora LifeScience s no guarantee for future returns. Future returns depend on the market, fund manager skill, fund risk level, costs, among others. Performance in the fund may at times be negative and may for this fund vary considerably within periods.
Source: Arctic Fund Management, Reuters, Wall Street Journal