As consumers across the U.S. eye deals on Black Friday, one of America's largest health care product makers is seeking a special purchase of its own.
Following speculation, Switzerland-based biotech Actelion (ALIOF) confirmed that it is currently a takeover target for Johnson & Johnson (JNJ) . And if the acquisition succeeds, it could be worth nearly $20 billion.
Investors on both sides of the deal were pleased. In Friday trading, they sent Johnson & Johnson's stock up over 1% and Actelion shares up by nearly 20%.
Actelion's drug portfolio includes popular treatments for pulmonary arterial hypertension (PAH), which can lead to heart failure if left untreated. Its drug Tracleer was for years the American cardiologist's go-to drug for PAH, but it lost its patent protection in November 2015.
However, this year, Actelion's newer PAH therapies, Opsumit and Uptravi, saw sales that blew past those of Tracleer for the first time. That recently led the company to up its earnings guidance for the third time in 2016.
Prior to news of an offer on Thursday, Actelion shares had seen a year-to-date boost of about 13%, giving it a market value around $17 billion.
This hefty purchase would be affordable to Johnson & Johnson, however. After all, this giant multinational carries a market cap of more than $300 billion. Johnson & Johnson has been making a concerted effort to beef up its product portfolio through acquisitions.
In September, the company agreed to buy Abbott Laboratories' eye care business in a cash deal worth about $4.33 billion.
Johnson & Johnson is a massive company, with a history stretching 130 years. Its divisions include the world's largest medical device business, and it also owns market-dominating personal care and health brands such as Tylenol and Band-Aid. Overall, Johnson & Johnson owns and operates more than 250 subsidiaries.
The sheer size and diverse portfolio of Johnson & Johnson have helped it survive as other pharmaceutical and health care companies have struggled. That's made this company a legacy investment. It seems to have assembled the perfect mix of products. It is not limited to pharmaceuticals that it has developed or acquired or to over-the-counter products.
Consider Johnson & Johnson more as a health care mutual fund than as another pharma stock. But that's not to say its stock has seen the typical mutual fund performance for 2016. Instead, shares of Johnson & Johnson are up by more than 11% year to date.
On Tuesday, Johnson & Johnson shares continued their post election pullback. This has lowered the share price, giving interested investors a great opportunity to buy this stock for the long term. Purchases such as Actelion should only continue to boost this legacy stock.
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