Forget much of what you have heard about disciplined acquisitions and waiting for valuations to become realistic. Johnson & Johnson’s (NYSE:JNJ) $30bn strike for Actelion (OTCPK:ALIOF) (OTCPK:ALIOY) today points to the M&A sweet spot – lower-risk, commercial-stage, mid-cap companies with a growing top line.
There is still a wide gap between forecasts for Actelion’s assets and the agreed price, but J&J had offshore cash to burn and was just two days from releasing disappointing 2017 guidance, so executives had motivation for a strategic play. Deal bankers working with companies similar to Actelion – such as Biomarin (NASDAQ:BMRN) and Seattle Genetics (NASDAQ:SGEN) – must now be reviewing their pitches to see if they can successfully argue for better terms based on the J&J payout (see table below).
