The Health Care M&A Monthly: JNJ Buys Crucell, NV--

Pays $2.4  Billion To Grow Vaccines Business

Johnson & Johnson (NYSE: JNJ) recently announced plans to buy the remaining 82.1% that it does not already own of Crucell, NV (NASDAQ: CRXL), the Dutch vaccines company. The purchase price is $2.4 billion. This deal simultaneously complements the buyer’s infectious disease franchise and gives it a strong position in the vaccines industry.

Based in New Brunswick, New Jersey, Johnson & Johnson is involved in three areas of health care: consumer products, pharmaceuticals, and medical devices and diagnostics. Its consumer products include such brands as Listerine, Band-Aid, Tylenol and Zyrtec. Its pharma segment includes the drugs Remicade and Levaquin. Its medical device business embraces a wide variety of products, including those for joint reconstruction, contact lenses and blood glucose monitoring systems. On a trailing 12-month basis, it generated revenue of $63.0 billion, EBITDA of $19.7 billion and net income of $13.5 billion.

While JNJ already has a biotech business in its Centocor division, the company has sought to grow into the vaccine business. Last year, it acquired its initial stake in Crucell for about €300.0 million as well as an 18% stake in Ireland’s Elan Corp., plc (NYSE: ELN). Wyeth had also vied to acquire CRXL, but subsequently dropped its bid when it was itself acquired by Pfizer (NYSE: PFE). Vaccine companies are seen as attractive takeover targets since they tend to be relatively low-tech for biotech companies and have little in the way of generic competition. This ensures that their revenue streams, while not as high as more complicated biotech drugs, are steady and reliable.

Based in the Netherlands, Crucell develops, manufactures and markets vaccines to combat infectious diseases with a focus on the pediatric, travel and endemic, and respiratory markets. Its best known (and best selling) vaccine is Quivaxem, which immunizes against five childhood diseases. The company is developing an AIDS vaccine as well as human monoclonal antibodies, such as a rabies antibody combination, influenza antibodies and a hepatitis C antibody combination. On a trailing 12-month basis, CRXL generated revenue of $510.0 million, EBITDA of $84.5 million and net income of $44.9 million.

Under terms of the deal, JNJ is offering €24.75 ($34.35) in cash per share for CRXL for a total of $2.4 billion. This bid represents a 57% premium to the stock’s price the day before the deal was first mooted. Since news of the deal, however, CRXL’s stock price had risen slightly higher than the price being offered, suggesting some wiggle room for an enhanced bid. That, at least, is what CRXL’s second-largest shareholder, the Van Herk Groep with a 9.6% stake, hoped would happen. But given the diversity of the shareholder base, it was nigh impossible for them to come together to force a higher bid.

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