Novartis will make a cash tender offer of $82 for each of AAA’s American depositary shares, the Basel, Switzerland-based company said in a statement yesterday. The price is 12% above where the depositary shares closed Friday in the US, and 37% above where they were trading in late September, before Bloomberg News reported that Novartis had approached AAA about a deal.
Sealing the deal is likely to be one of the final steps taken by Novartis chief executive officer Joseph Jimenez, who plans to step down at the end of January after eight years at the helm. Under him, the Swiss behemoth has announced more than $30bn in deals over the past four years, the largest being its 2015 acquisition of GlaxoSmithKline Plc’s oncology portfolio for as much as $16bn.
“Novartis’s planned acquisition of Advanced Accelerator Applications fits strategically, but appears expensive to us,” analysts at Vontobel Equity Research said in a note to clients.
The deal values AAA at 20 times the company’s projected 2018 sales, they said. Shares of Novartis fell 0.6% to 80.55 Swiss francs as of 9:15am in Zurich trading. The stock has gained 8.8% this year. Vas Narasimhan, the chief medical officer and global head of drug development at Novartis, will take over as CEO starting in February. Under Jimenez, the company has been hunting for assets to bolster its businesses in areas from cancer to cardiovascular disease.
AAA makes radiopharmaceuticals, or radioactive drugs, used to diagnose and treat diseases such as cancer. Italian academics founded the company in 2002 as a spinoff of the European Organisation for Nuclear Research, or CERN. AAA is based in Saint-Genis-Pouilly, a French town just outside Geneva.
AAA’s chief executive officer Stefano Buono said in an interview on Oct. 11 that a study was set to begin to evaluate its treatment Lutathera in combination with a checkpoint inhibitor for treatment of lung cancer. Lutathera, aimed at neuroendocrine tumours, won European approval in September and is awaiting a decision in the US in January.
The company sold the receipts at $16 each in a US initial public offering in 2015. Its second-biggest shareholder, after Fidelity Investments, is HBM Healthcare Investments AG, a Swiss investment fund that bought a stake before the IPO.
Novartis said it signed a memorandum of understanding with AAA, which has been approved by AAA’s board of directors. Board members and the management of AAA support the deal and have agreed to tender their shares into the proposed offer, the French company said in a separate statement.
Jefferies LLC acted as the financial adviser to AAA, with Davis Polk & Wardwell LLP providing legal counsel. For Novartis, PJT Partners provided the financial advice while Shearman & Sterling provided legal counsel.
Novartis will make a cash tender offer of $82 for each of Advanced Accelerator Applications’ American depositary shares, the Switzerland-based company said in a statement yesterday. The price is 12% above where the depositary shares closed Friday in the US, and 37% above where they were trading in late September, before Bloomberg News reported that Novartis had approached AAA about a deal.