BY Richard Summerfield
In a deal that is likely to be one of the largest healthcare mergers of the year, US drug manufacturer AbbVie has agreed to buy Irish Botox producer Allergan in a deal worth $63bn. The company will pay $120.30 in cash and a portion of AbbVie stock for each Allergan share held. This amounts to $188.24 per share, around a 45 percent premium on Allergan’s closing stock price on Monday.
AbbVie shareholders will own 83 percent of the merged company, while Allergan shareholders will own the remaining 17 percent. The company will be headquartered in Chicago and will be led by Richard Gonzalez, chairman and chief executive of AbbVie.
The deal, which is expected to close in early 2020, is forecast to add 10 percent to AbbVie’s adjusted earnings per share over the first full year following the close, the companies said in a statement. Furthermore, AbbVie expects annual pre-tax savings and other cost reductions of at least $2bn in the third year after the deal closes. Abbvie remains committed to paying down its debts by $15bn to $18bn by the end of 2021.
“This is a transformational transaction for both companies and achieves unique and complementary strategic objectives,” said Mr Gonzalez. “The combination of AbbVie and Allergan increases our ability to continue to deliver on our mission to patients and shareholders. With our enhanced growth platform to fuel industry-leading growth, this strategy allows us to diversify AbbVie’s business while sustaining our focus on innovative science and the advancement of our industry-leading pipeline well into the future.”
“This acquisition creates compelling value for Allergan’s stakeholders, including our customers, patients and shareholders,” said Brent Saunders, chairman and chief executive of Allergan. “With 2019 annual combined revenue of approximately $48bn, scale in more than 175 countries, an industry-leading R&D pipeline and robust cash flows, our combined company will have the opportunity to make even bigger contributions to global health than either can alone. Our fast-growing therapeutic areas, including our world class medical aesthetics, eye care, CNS and gastrointestinal businesses, will enhance AbbVie’s strong growth platform and create substantial value for shareholders of both companies.”