Actelion / Johnson & Johnson: Trading Idorsia, the R&D NewCo Spin-Off

CEO, Manalo LLP

Roderick Manlo

Manalo LLP

We provide event driven research services to hedge fund managers and institutional investors that cover select definitive and pre-announced M&A deals, focusing on identifying and analysing the key upside and downside risks to a particular transaction. We primarily analyse $billion+ takeovers or mergers of publicly-traded European targets, but also look at deals globally to assess when there is a key European angle or aspect that can influence the deal outcome.

With over 16 years’ experience in risk arbitrage and investment banking, we specialise in providing research and advisory services on all facets of risk arbitrage, with particular expertise in:

- Cross-Border M&A
- Hostile Takeovers
- Local Takeover Codes
- Antitrust & Competition
- Financial Valuation
- Shareholder Vote Analysis
- Impacts of Precedent Transactions
- Risk Arbitrage Trading Strategies

Event-Driven

<p>Any deal-threatening risks to the Actelion / Johnson &amp; Johnson transaction were assuaged in late March and we now solely await EC antitrust approval before the transaction closes towards the end of 2Q’17. We have no doubts over transaction completion but note that Actelion’s more liquid tendered line (ATLNEE SW) recently traded to as low as CHF 277.9 on the back of multiple minor factors: 1) the Swiss franc depreciated 4% in less than two weeks and now sits at its lowest level since November 2016; 2) arbs are full in the name and may be lightening positions ahead of receiving shares in the Idorsia spin-off; 2) the stock was removed from the SMI Index on 3-May-17; and, 4) arbs had expected to be paid in mid-late May, but this has been pushed out by a month. We explore the differences between the Actelion's two trading lines, the untendered shares (ATLN SW) and the tendered shares (ATLNEE SW). While the untendered line is slightly less liquid, this is not the primary reason why it trades cheaper. The issue with the untendered line lies in what may happen to the stock after the offer completes.</p>

Any deal-threatening risks to the Actelion / Johnson &amp; Johnson transaction were assuaged in late March and we now solely await EC antitrust approval before the transaction closes towards the end of 2Q’17. We have no doubts over transaction completion but note that Actelion’s more liquid tendered line (ATLNEE SW) recently traded to as low as CHF 277.9 on the back of multiple minor factors: 1) the Swiss franc depreciated 4% in less than two weeks and now sits at its lowest level since November 2016; 2) arbs are full in the name and may be lightening positions ahead of receiving shares in the Idorsia spin-off; 2) the stock was removed from the SMI Index on 3-May-17; and, 4) arbs had expected to be paid in mid-late May, but this has been pushed out by a month. We explore the differences between the Actelion's two trading lines, the untendered shares (ATLN SW) and the tendered shares (ATLNEE SW). While the untendered line is slightly less liquid, this is not the primary reason why it trades cheaper. The issue with the untendered line lies in what may happen to the stock after the offer completes.

Actelion / Johnson & Johnson: Tendered Vs Untendered Lines

Actelion Ltd

Actelion / Johnson & Johnson: Tendered Vs Untendered Lines