Johnson & Johnson Negotiating To Buy Crucell

Johnson & Johnson is close to making a deal to acquire the Dutch biopharmaceuticals firm Crucell. Already holding a 17.9% stake in the company, J&J is offering $2.3 billion for the rest. The two companies have been partners since September 2009 when they began collaborating on the development of influenza and other vaccines.

If the deal goes through, J&J will make major progress towards establishing a vaccine business, a large hole in its otherwise diverse lineup of healthcare businesses. Once more or less shunned by all but a few major drug firms, vaccines have again become a popular market area. Crucell says it is one of the major suppliers of vaccines to the developing world.

According to the two companies, Crucell's discovery and manufacturing capabilities will create a strong platform for J&J in the vaccine market. Crucell, meanwhile, will benefit from J&J's experience in developing and selling drugs. In the first half of this year, Crucell had sales of $253 million.

In early 2009, Crucell talked with Wyeth about a potential merger, but that fell through after Wyeth agreed to be acquired by Pfizer. J&J's offer is at a 58% premium over Crucell's recent share price. But reports from Europe indicate that the Van Herk Group, a Dutch investment firm that owns 9.6% of Crucell, thinks the offer is too low.

Following its usual pattern for acquiring companies, J&J plans to keep Crucell essentially intact and operate it as a center for vaccines development. Consequently, J&J expects to retain Crucell's senior management and most of its 1,300 employees, while keeping open existing facilities, including headquarters in Leiden, the Netherlands.

Crucell will retain an entrepreneurial culture that has fostered innovation and growth, according to the two companies. J&J says it will continue to invest in the development of Crucell's products and pipeline. The company has several drug candidates based on its PER.C6 production technology, which it also has licensed to dozens of other drug and contract manufacturing firms through a relationship with DSM Biologics.