U.S. healthcare companies Abbott Laboratories
Johnson & Johnson, the world's largest health company by market value, and smaller rival Abbott are already the most diversified of the large U.S. and European players, but continue to buy up companies and products -- often at distressed prices -- as part of the industry's resurgent mergers and acquisitions activity.
Abbott said it would buy the drugs unit of Belgium's Solvay
Abbott shares rose 4.6 percent to $49.52, helped by company optimism that the Solvay deal could bolster profits over the next two years beyond its own forecast.
This is a great use for the assets and a heck of a good return, Abbott Chief Executive Miles White said on a conference call with analysts.
White said Abbott has a comfortable amount of debt and was not financially constrained at all in pursuing other deals to bring more medicines into its research pipeline.
Solvay shares fell 1.1 percent to 73.89 euros.
Abbott had faced competition for Solvay from private equity-owned Swiss drugmaker Nycomed
Johnson & Johnson bought an 18 percent stake in Dutch biotech company Crucell
Takeover talks between Crucell and U.S. drugmaker Wyeth
Vaccine-makers have been hot M&A targets recently, particularly for large drugmakers eager to secure new products as exclusivity on existing best-selling products nears an end.
On Monday, GlaxoSmithKline PLC
Abbott's deal includes Solvay's vaccines business, whose Dutch cell-based flu vaccine production facility, which can produce both seasonal and pandemic influenza vaccines, was validated earlier this month.
Abbott said it would finance its deal with cash and expected it to add 10 cents to ongoing earnings per share in 2010, doubling to more than 20 cents by 2012 and increasing thereafter, all before one-off transaction items expected in 2010-2012.
Abbott had been reviewing a potential Solvay deal for months and had little initial interest, but reversed course over the summer after getting a better understanding of Solvay's drugs and their sales potential, White said.
We did more homework and made the increased effort, said White, Abbott's longtime chief who has spearheaded four other significant deals this year. The Solvay transaction should help Abbott continue to deliver double-digit percentage earnings growth in coming years, he said.
Johnson & Johnson's transaction will have an estimated dilutive impact of 2 cents to 4 cents on its 2009 adjusted earnings per share.
Crucell issued 14.6 million new Crucell shares to Johnson & Johnson, which paid about a 30 percent premium based on the average price of Crucell shares in the past 35 days -- or about 20.63 euros per share.
Crucell said the collaboration will focus on developing flu-mAb, a universal product targeting all influenza A strains. That includes H1N1 strains that cause seasonal flu and the current pandemic flu, along with the H5N1, or avian, strain.
A universal antibody or vaccine that protects against a broad range of strains would be an important advance in helping ... control acute epidemic and pandemic outbreaks, said Paul Stoffels, global head of pharmaceuticals R&D at Johnson & Johnson.
Analyst Ilja Zaanen at SNS Securities said: This collaboration is a good deal for Crucell. Although the (vaccine) is still in a very early stage, Crucell would not have been able to support the expensive late clinical trials on its own.
Crucell's shares were down down 3.9 percent at 15.33 euros. J&J shares rose 1 percent to $61.24 on the New York Stock Exchange.
(Additional reporting by Ransdell Pierson and Jan Harvey, writing by Jason Neely and Lewis Krauskopf; Editing by Simon Jessop and Maureen Bavdek)