AbbVie to Acquire Allergan in $63 Billion Deal to Diversify Beyond Humira

AbbVie Announces Acquisition of Allergan for Nearly $63 Billion, Citing New Growth Opportunities

According to the announcement, Allergan shareholders will receive 0.866 shares of AbbVie plus $120.30 in cash (approximately $188.24 per share) for each share held, representing a 45% premium over Allergan’s previous closing price of $129.57 per share. Investors believe that the premium would have been higher if not for the recent surge in Allergan’s stock price driven by news of AbbVie’s spin-off.

Sources stated that Allergan’s botulinum toxin and other aesthetic drugs commanded a market exceeding $8 billion, complemented by several best-selling ophthalmic therapeutics. The company’s annual revenue of nearly $16 billion in 2018 would also provide AbbVie with an additional cash flow stream. Barring any unforeseen complications, the merger is expected to close in early 2020.

AbbVie owns Humira, the world’s best-selling drug, with 2018 sales approaching $20 billion (see: AbbVie 2018 Financial Report: Humira One Step Away from $20 Billion, Oncology Business Awaiting Breakthrough). However, the patent for this product expired in Europe in October 2018, and although settlements have been reached with multiple generic manufacturers in the United States, the U.S. patent is also set to expire in 2023. The acquisition of Allergan can be viewed as a risk-mitigation strategy by its shareholders.

Notably, this marks another mega-deal this year, following the announcement of the merger between BMS and Celgene.

Reprinted from: PharmaCube