J&J Makes a Pitch for Crucell

Johnson & Johnson (JNJ) recently announced its plans to buy out the rest of Dutch biopharmaceutical company Crucell NV (CRXL) for €1.75 billion or €24.75 per share cash. Johnson & Johnson had previously acquired a 17.9% stake in Crucell in September 2009 for €301.8 million.

The companies are currently in an advanced stage of discussion regarding the proposed acquisition. Once the acquisition is complete, Johnson & Johnson plans to retain the existing facilities and senior management of Crucell. Following the acquisition, Crucell will lead Johnson & Johnson’s vaccines division.

This acquisition should not only help strengthen Johnson & Johnson’s portfolio, it should also allow the company to build its presence in the vaccines market, given Crucell’s expertise in the manufacture, discovery and commercialization of vaccines.

Vaccines are becoming one of the most sought-after segments in the pharmaceutical industry. This acquisition will enable Johnson & Johnson to compete with established vaccine players such as GlaxoSmithKline plc (GSK), Merck & Co. Inc. (MRK), Novartis AG (NVS) and Sanofi-Aventis (SNY).

Johnson & Johnson has been in acquisition mode over the past few quarters. Earlier this year, the company announced its intention to acquire Micrus Endovascular Corp. The upcoming acquisition of Micrus, announced in July, will expand Johnson & Johnson’s stroke treatment portfolio, as Micrus is a global developer and manufacturer of catheters and other minimally invasive devices which are used to address stroke-related problems in the brain, like arterial thickening or aneurysms.

Our Recommendation

We currently have a Zacks #4 Rank (short-term Sell rating) on Johnson & Johnson given the OTC product recall and EU pricing pressure.

However, longer-term, we have a Neutral recommendation on Johnson & Johnson. We are pleased with the company’s efforts to offset the declining sales of some of its important products by bringing in new products through in-licensing deals and acquisitions. We believe the diversity and strength of the company’s underlying businesses should continue to provide strong growth in future.

JOHNSON & JOHNS (JNJ): Free Stock Analysis Report
CRUCELL-ADR (CRXL): Free Stock Analysis Report

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