New York, Berlin: Johnson & Johnson agreed to buy Actelion Ltd for $30 billion (Dh110.1 billion) and spin off the Swiss drugmaker’s research and development operations, clinching its largest deal ever to become a leader in medicines for a rare type of high blood pressure.

J&J, which is funding the transaction with the cash it holds outside the US, will fulfil its goal of gaining a new drug category and see its earnings get an immediate boost from the transaction. The deal is expensive compared to recent industry takeovers such as Pfizer Inc’s acquisition of Medivation Inc and AbbVie Inc’s purchase of Pharmacyclics Inc, according to an analysis from Bloomberg Intelligence.

The agreement caps two months of stuttering negotiations to find a deal structure palatable to Jean-Paul and Martine Clozel, Actelion’s founders. The discussions were interrupted for several days after New Brunswick, New Jersey-based J&J walked away on December 13, only to return to the negotiating table about a week later, interrupting talks Clozel had started holding with France’s Sanofi.

J&J will begin a tender offer to buy shares of Allschwil, Switzerland-based Actelion for $280 each in cash, the companies said in a statement. The price, which equals 280.08 Swiss francs, is 23 per cent above Wednesday’s closing level. The research and development operations will be spun off to Actelion shareholders as a new publicly traded company with 1 billion francs of cash. J&J will keep a 16 per cent stake in the new company.

Overseas cash

J&J is paying more than 21 times Actelion’s estimated 2020 earnings per share, more than double what AbbVie spent on its cancer biotech, which “shows how hard it is to find an asset that actually makes a difference in your earnings,” said Sam Fazeli, an analyst for Bloomberg Intelligence in London.

It’s possible that the new US administration could present an obstacle to using overseas cash to fund the deal, Fazeli said.

J&J held $38.2 billion in cash and equivalent securities through its foreign subsidiaries as of January 3, 2016. Repatriating all of the funds to the US could have tax implications, the drugmaker said at that time.

The Actelion deal comes just as US President Donald Trump begins to offer details on his plans to create jobs and persuade US companies to keep their operations in the US since taking over on January 20. Trump has also said he wants American companies to bring trillions of dollars in offshore cash back home, arguing that the money could be used to fund a manufacturing renaissance.

Access to Actelion’s drugs Tracleer, Opsumit and Uptravi, which all treat life-threatening pulmonary arterial hypertension, will make J&J a leader in treating the disease and help it expand beyond autoimmune, heart and cancer drugs.

The new deal will immediately start adding to J&J’s earnings when the transaction in completed by the end of the second quarter, the companies said. The US behemoth expects the transaction to boost its long-term profit growth by as much as 2 per cent over analysts’ expectations.

Actelion shares surged 21 per cent to 273.90 Swiss francs as of 12:54pm, after having climbed 68 per cent since early November. J&J ended Wednesday at $112.80 in New York, capping a 11.5 per cent increase in the past year.

New company

Meanwhile, the transaction deals a blow to Sanofi, which had also courted Actelion. This is the second time the French drugmaker will be left empty-handed, after losing out on cancer treatment maker Medivation to another US giant, Pfizer, in August.

The Clozels and a team of scientists who split from Roche Holding AG founded Actelion about 20 years ago. The discovery of the blockbuster Tracleer propelled it over a decade ago to becoming a leader in the treatment of pulmonary arterial hypertension. Uptravi and Opsumit followed and are set to replace Tracleer, which has lost patent protection and faces challenges from copycat drugs.

Clozel, who is Actelion’s chief executive officer and among its largest shareholders, had said in the past he wanted the company to remain independent. The CEO is a believer in Actelion’s pipeline of experimental medicines, and he and his wife have resisted takeover bids over the years.