J&J eyes vaccine market with $2.3 billion Crucell bid

AMSTERDAM (Reuters) - U.S. healthcare group Johnson & Johnson JNJ.N launched its long-awaited 1.75 billion euro ($2.3 billion) bid for Crucell CRCL.AS, despite some investor opposition and the Dutch biotech's vaccine production problems.

J&J said in September it would bid 24.75 euros per share for the outstanding shares in Crucell -- whose vaccines protect against childhood diseases including whooping cough and diphtheria.

The acquisition would catapult J&J, which already owns 17.9 percent of Crucell, into the global vaccine market given the biotech firm’s strong position in vaccines for childhood and other diseases including measles, typhoid and hepatitis, and its focus on developing influenza, or flu, vaccines.

But J&J quickly ran into objections from some key investors who said Crucell was worth more.

Van Herk Groep, which is Crucell’s second-biggest shareholder with a 10.02 percent stake and has opposed the deal, declined to comment on Wednesday.

In September, Van Herk urged the Dutch biotech to withdraw its support for J&J’s bid, saying that Crucell’s stand-alone value should be 27.50 euros per share.

“The large pharma companies need new products, and J&J and Crucell have been working together for years so they know each other, it is a good fit,” said Tom Muller, analyst at Theodoor Gilissen.

“Short term it’s the childhood vaccines, but over the next five to six years it’s the influenza vaccine,” that will generate huge growth for J&J given the worldwide demand for influenza vaccines, Muller added.


J&J’s bid also faced uncertainty over problems at one of Crucell’s production plants in South Korea.

Crucell halted shipments of its pediatric vaccine Quinvaxem and its hepatitis B vaccine Hepavax-Gene in October, pending an investigation into whether sterilization operations at the plant had been compromised.

It was forced to take a charge, resulting in a third-quarter net loss of 27 million euros and Crucell said last month it saw full-year revenue in line with last year but expected a 2010 operating loss of 20-25 million euros.

“Resolving the contamination issue in our Shingal facility is our number one priority. ... We have mobilized all required resources to investigate and correct the problem so we can resume shipments in the coming weeks,” Chief Executive Officer Ronald Brus said last month.

Crucell shares had fallen after the setback in Korea. But at 1310 GMT Wednesday the stock was up 0.8 percent at 23.935 euros after the announcement of J&J’s recommended cash offer.

Crucell had been upbeat on prospects for Quinvaxem after rival Sanofi-Aventis's SASY.PA Shantha Biotechnics was forced to recall its vaccines and lost in July a prequalification status to supply the World Health Organization.

J&J said the offer was subject to fulfillment of certain conditions including a minimum acceptance level of at least 95 percent of the shares, which will be reduced to 80 percent if certain conditions are met.

It will accept shares from Thursday until February 16.

Editing by Erica Billingham