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Actelion would be Left with 'Lot of Explaining to do' if it Rejects J&J Offer

Actelion would be Left with 'Lot of Explaining to do' if it Rejects J&J Offer
Chief Executive of Actelion, Jean-Paul Clozel, would be left  with some explaining to do if he turned down an offer around that level as some Actelion shareholders would be attracted by a $27 billion bid for the Swiss biotech company from Johnson & Johnson.
The two companies are discussing a bid close to that price, or 250 Swiss francs per share, reported Reuters quoting one source familiar with the matter.
That would be tempting for shareholders who would prefer to cash in now rather than bet on an uncertain future as it is a 60 percent premium to Actelion's market value before the companies confirmed last week they were in talks.
"If I look at the (drugs) pipeline that Mr. Clozel is excited about, I am perhaps less excited about it and see perhaps a greater risk than reward," said Eleanor Taylor Jolidon, a fund manager at Union Bancaire Privee in Geneva, which is among the top 40 investors in Actelion and holds 0.23 percent of outstanding shares, according to Reuters data.
Taylor Jolidon said that an offer around 250 francs per share would be "something we could start looking at". "He would have a lot of explaining to do." should Clozel reject such a price, she added.
Helped by fellow shareholder Swiss billionaire Rudolf Maag and a supportive Swiss investor base, Clozel has, in the past, guarded Actelion's independence.
A campaign by U.S. hedge fund Elliott Advisors to put the company up for sale was fended off by him in 2011. Actelion was worth 70 francs per share, about a third of its current price, Elliott suggested at the time.
Clozel reportedly saw off bid interest from British drugmaker Shire in 2015.
After nearly two months of informal talks, Johnson & Johnson (J&J) had increased its offer - which has not yet been made public, a source familiar with the matter said.
The sources reportedly added that while the U.S. firm favors a straightforward takeover Actelion wants J&J to become a major shareholder in a new entity, and this is the main stumbling block.
Clozel and his wife, Chief Scientific Officer Martine Clozel, have been lauded for building Europe's biggest biotech from scratch since Actelion's founding in 1997 as the duo have built up a world-leading drug portfolio to treat deadly pulmonary arterial hypertension (PAH).
Drugs for multiple sclerosis and diarrhea-causing clostridium difficile are aimed to be expanded by the company even though regulatory approvals for those are years away.
According to Reuters data, combined are forecast to bring in nearly 4.5 billion francs ($4.4 billion) in annual sales by 2020, new PAH treatments Opsumit and Uptravi are the ones that the company is also counting on.
The 61-year-old CEO and Maag together own just over 8.5 percent of Actelion stock.
Some investors think J&J has timed its approach well.
"At this juncture and at his age, Mr. Clozel might be willing to consider new opportunities for Actelion," said Alexandre Stucki of AS Investment Management in Geneva, who owns Actelion stock in a portfolio worth "several hundred million Swiss francs".
"If J&J is willing to offer 200 francs or more per share, they probably see good value in the pipeline as well."

Christopher J. Mitchell

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