JNJ Johnson and Johnson

By Jonathan D. Rockoff and Dana Mattioli 

Johnson & Johnson pulled out of talks to buy Swiss drug company Actelion Pharmaceuticals Ltd. after the price needed to seal the deal got too high.

New Brunswick, N.J.,-based J&J issued a statement Tuesday evening saying it had ended talks after the companies confirmed J&J's approach last month.

In its own statement, Actelion said it's "engaged in discussions with another party regarding a possible strategic transaction."

It isn't clear exactly what price the two sides discussed, but should they have reached a deal it was expected to be valued at as much as $30 billion. Actelion currently has a market value just above $22 billion after its shares ran up on expectations of a takeover.

At that level, a deal would have eclipsed J&J's biggest to date, the $21 billion acquisition of trauma-device maker Synthes Inc. in 2011.

J&J decided the price was too high to make the kind of return the health-products company expects on a deal, a person familiar with the matter said.

"Johnson & Johnson was not able to reach an agreement that it believed would create adequate value for its shareholders," the company said in its statement.

It isn't clear whether other suitors are still circling Actelion.

J&J had been pursuing Actelion because its portfolio of rare-disease drugs would have helped the health-products giant overcome low-priced competition for its top-selling drug Remicade. Actelion has a specialty in the treatment of pulmonary arterial hypertension.

Last year, Actelion reported revenue of 2.05 billion Swiss francs ($2.03 billion) and a profit of 551.9 million francs.

With a market value of more than $300 billion and about $40 billion in cash, J&J had the financial firepower to do a deal.

But Chief Executive Alex Gorsky and Chief Financial Officer Dominic Caruso have said they would not overpay for acquisitions.

J&J lost out in an auction of Pharmacyclics, a cancer-drug company that AbbVie Inc. ended up buying last year for $21 billion.

Actelion was an imperfect fit for J&J, which doesn't have a franchise selling rare-disease drugs, like some other big pharmaceutical companies do.

It isn't the first time lately that a bid to seal a big drug merger has fallen apart.

There have been more than $250 billion of health care deals announced so far in 2016, according to Dealogic, down from a total of more than $500 billion in all of 2015. Last year's tally would have been even greater if Pfizer's roughly $150 billion agreement to buy drugmaker Allergan PLC hadn't fallen apart amid resistance from the Obama administration. The deal was to be a so-called inversion, moving Pfizer abroad for tax purposes. Indeed, resistance in Washington is one factor cited by deal makers for the drop in merger activity in 2016.

Write to Jonathan D. Rockoff at Jonathan.Rockoff@wsj.com and Dana Mattioli at dana.mattioli@wsj.com

(END) Dow Jones Newswires

December 13, 2016 20:27 ET (01:27 GMT)

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