US health care company Johnson & Johnson, looking to catapult itself into the global vaccine market, is in talks to pay 1.75bn euros (£1.46bn) to buy Dutch biotech Crucell.
J&J, which already owns a 17.9 per cent stake in vaccine maker Crucell, said its potential cash offer valued Crucell shares at 24.75 euros, a 58 per cent premium to Thursday's closing price.
Crucell shares jumped 53.9 per cent to 24.16 euros, lifting other Dutch biotech stocks and shares in Austrian vaccine maker Intercell, which climbed 6.7 per cent.
"We believe the chances for success are high. The bid price on the remaining shares can be considered as a knock-out price and is substantially higher than the analysts' consensus target price," analyst Jan de Kerpel at KBC Securities said.
De Kerpel said the potential deal was more proof it was a question of "not if but rather when" other successful biotech companies with late-stage products will be bought.
Johnson & Johnson and Pfizer have been flagged as possible, but unlikely, rival bidders for U.S. biotech company Genzyme, the target of Sanofi-Aventis, so the bid may signal J&J is out of that race.
A Britain-based analyst who did not wish to be named said it would be "pretty unlikely" that Johnson & Johnson would bid for both Genzyme and Crucell at the same time.
Crucell Chief Executive Ronald Brus said the potential deal with J&J, which does not have its own vaccine business, meant the world's sixth-largest vaccine producer can accelerate its development programme.
"With the help of Johnson & Johnson we can increase our reach throughout the world significantly," Brus told reporters. "Together we feel we form a very strong team."
Brus said he intended to stay on and did not expect any lay-offs at Crucell, which produces vaccines against flu and childhood diseases and is developing products against yellow fever alongside research into tuberculosis and malaria vaccines.
Drugmakers have been looking to biotech to refill product pipelines at a time when sales of old blockbusters are falling to generic competition. Vaccine makers have also become more attractive as their sales and traditionally low margins improve.
Johnson & Johnson is a diversified group that makes prescription drugs as well as Tylenol pain relievers, Listerine mouth wash and Band-Aid adhesive bandages.
Company veteran William Weldon has been chief executive since 2002.
It bought its stake in Crucell, one of two major independent vaccine makers in Europe alongside Intercell, in September 2009 as part of a flu vaccine development deal.
Crucell is on the cusp of sharp sales growth for its paediatric vaccine Quinvaxem after a production failure at rival Shantha Biotechnics, which was bought by Sanofi-Aventis last year for 6.1 times its annual sales.
City A.M. Reporter