Alexion to Buy Portola in $1.4 Billion Effort to Diversify

(Bloomberg) -- Alexion Pharmaceuticals Inc. agreed to buy Portola Pharmaceuticals Inc. for about $1.4 billion, in a deal the drugmaker expects will help it diversify after an activist investor pushed for changes.

Boston-based Alexion will pay $18 a share in cash for Portola, the companies said in a statement on Tuesday. That's more than double Portola's Monday's closing price of $7.76. The transaction was cleared by both boards and is expected to close in the third quarter.

Portola shares surged, climbing as high as $17.88 at 9:36 a.m. in New York, while shares of Alexion declined 4.5% to $99.17.

Hedge fund Elliott Management Corp. has been pushing for changes at Alexion, saying the rare-disease drugmaker is undervalued. Elliott had urged the company to put itself on the block, though Chief Executive Officer Ludwig Hantson said at a health-care conference in January that Alexion hadn't been engaged in any official sales process.

South San Francisco-based Portola recently came to market with a coagulant medicine called Andexxa that is used to quell potentially fatal bleeding in patients who take drugs known as factor Xa inhibitors. Prior to the deal pact with Alexion, shares of Portola had fallen sharply after hitting a 52-week high of $36.77 last May, in part on fears that Andexxa wasn't selling as well as Wall Street had hoped.

“We believe Andexxa has the potential to become the global standard of care for patients who experience life-threatening bleeds,” Hantson said in the statement.

Alexion will look to use its commercial infrastructure and expertise to squeeze more value out of Andexxa than Portola could have alone, Hantson told investors on Tuesday during a conference call. “It is a clear strategic fit with our existing portfolio,” he said.

Jared Holz, a Jefferies LLC health-care strategist in New York, wrote in a note that the deal is a “smart tuck-in” for Alexion, which will serve “as a proverbial savior with ability to run this business perhaps better on a more global basis.”

Alexion can increase Andexxa's sales by boosting adoption on hospital formularies, which it currently sees as limited, said Brian Goff, chief commercial and global operations officer, on the call. Chief Financial Officer Aradhana Sarin said Andexxa still has a long runway ahead of it. Its intellectual property is protected for more than a decade, she said.

RBC Capital Markets served as Alexion's financial adviser on the deal. Centerview Partners was Portola's financial adviser and Cooley LLP was its legal adviser.