Johnson & Johnson and Crucell are in advanced negotiations for the pharmaceutical giant to make a public offer all outstanding shares of the Dutch vaccine maker. The potential deal is valued at $2.3 billion (€1.75 billion), which represents a purchase price of €25.75 per share, a 58 percent premium over Crucell’s closing price on September 16.

Crucell’s shares skyrocketed 58 percent on the announcement, the highest they have been in 10 years. The company is expected to urge shareholders to accept the offer. Johnson & Johnson acquired 17.9 percent of the company in a deal with the vaccine maker last year that brought the two companies together in an effort to develop a universal flu vaccine.

The global vaccine market reached $22.1 billion last year, up from $19 billion in 2008, and is expected to expand 9.7 percent annually in the next five years, according to a recent report from Kalorama, a market research company.
Vaccines are increasingly seen as a revenue generator for pharmaceutical companies seeking to replace revenue lost to patent expirations and generic competition.

Analysts don’t expect any opposition to the deal, who see the offer as a sweet premium for the company. The deal values Crucell at about 57 times 2010 estimated earnings, compared with a median multiple of about 36 times profit in biotechnology deals in the past year, according to Bloomberg analysis.

Crucell will be able to benefit from Johnson & Johnson's expertise and experience in the development and commercialization of pharmaceutical products, while Crucell's strength in the manufacture, discovery and commercialization of vaccines will create a strong platform for Johnson & Johnson in the vaccine market.

If the transaction goes through, Crucell will become the center for vaccines within the pharmaceutical’s group of business. Johnson & Johnson expects to keep the division intact and maintain its headquarters in Leiden, the Netherlands.

While no formal agreement has been reached, there is little doubt among investors and analysts that the deal will be completed, especially since Johnson & Johnson already owns a substantial portion of Crucell and the boards of both companies have authorized them to proceed with negotiations.

Johnson & Johnson’s potential acquisition of Crucell capped a busy week for life sciences deal making and financing that started with the announcement that Genzyme was selling its genetic testing business to LabCorp for $925 million in cash. [See story]

The sale follows Genzyme’s May announcement that it planned to seek strategic alternatives for three units as part of a five-year plan to increase shareholder value. Genzyme plans to use the proceeds from the sale of Genzyme Genetics to finance the second half of the company’s $2 billion stock buyback to be completed by May 2011.

Genzyme’s management has rejected a bid by Sanofi-Aventis to acquire the company for approximately $17 billion as opportunistic and undervaluing the company’s resources. Sanofi’s bid for Genzyme has yet to go hostile.
One ongoing transaction did reached the “hostile” stage with Ramius, a private equity firm that holds a 10 percent stake in Cypress Biosciences, deciding to take a sweetened offer directly to shareholders after management rejected a previous offer to buy the company. Shares of Cypress were up 9 percent as Ramius began a tender offer of $4.25 per share in cash, up from a prior offer of $4.00. The Cypress board is reviewing the current offer and has advised shareholders to take no action pending the review.

Ramius had been disappointed with how the company was being run, and shares were at a five-year low when it made its first offer in late July. That offer was soundly rejected by Cypress, which busied itself by entering into two deals to shore up its central nervous system pipeline—with Marina Biotech and Alexza Pharmaceuticals. [See story]

Two significant renewable fuels partnerships were struck this week. Ocean Nutrition Canada, the world’s largest supplier of omega-3 fatty acid supplements, entered into a partnership with Canada’s National Research Council, military contractor Lockheed Martin, and technology company UOP to turn algae oil into green jet fuel.

Norway’s Statoil, one of the world’s largest offshore oil and gas producers, entered into a wide-ranging strategic partnership with Berkeley, California-based Bio Architecture Lab for the production of renewable fuels derived from macroalgae grown off the coast of Norway. BAL has extensive expertise growing algae off the coast of Chile and has also partnered with DuPont in a project funded by the U.S. Department of Energy’s Advanced Research Program to convert macroalgae into isobutanol.