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Actavis to buy Allergan for $66bn

Ends Valeant’s pursuit of Botox maker

Actavis

Allergan has finally put an end to repeated takeover bids from Valeant Pharmaceuticals by accepting a $66bn offer from rival pharma company Actavis.

Allergan, most well-known as the marketer of Botox for both aesthetic and health uses, has spent most of the year fighting off bids from fast-growing Canadian firm Valeant over concerns about its model of “cutting and slashing” when it comes to acquisitions.

Rumours began to grow in recent weeks that Actavis might step in as a 'white knight' bidder for Allergan, and now the company has had its bid accepted by Allergan, adding a promising R&D pipeline and solidly performing franchises in eyecare, aesthetics and more to Actavis' business.

Key figures for combined company

Deal valued at $66bn or $219 per share in cash and Actavis shares
Commits to $1.7bn in annual R&D investment
Enters top 10 companies by global revenues
Free cash flow generation of more than $8bn expected in 2016
Three blockbuster franchises each with annual revenues of more than $3bn

In addition to being a more welcome suitor for Allergan, Actavis's bid was also considerably higher than Valeant's offerings, standing at $219 per share, or $66bn.

Valeant's most recent confirmed bid valued Allergan at around $53bn, although reports had suggested that Valeant was prepared to push its bid up to around $210 per share.

The deal should put Actavis among the top 10 global pharmaceutical companies by sales revenue, with combined sales of more than $23bn anticipated in 2015.

"This acquisition creates the fastest growing and most dynamic growth pharmaceutical company in global healthcare,” said Brent Saunders, CEO and president of Actavis, which only recently completed a multibillion dollar deal to acquire Forest Laboratories.

“Management is committed to maximising the potential for the combined company to drive industry-leading top and bottom line growth,” said Saunders, who will lead the combined company.

“With this combination, we plan to transform the growth profile of our pharmaceutical business and have the ability to generate organic revenue growth at a compound annual growth rate of at least 10% for the foreseeable future.”

Allergan's CEO David Pyott, who was been an outspoken critic of Valeant's bid, was positive about the company's acquisition by Actavis.

“We are combining with a partner that is ideally suited to realise the full potential inherent in our franchise,” said Pyott. “Together with Actavis, we are poised to extend the Allergan growth story as part of a larger organisation with a broad and balanced portfolio, a meaningful commitment to research and development, a strong pipeline and an unwavering focus on exceeding the expectations of patients and the medical specialists who treat them.”

Article by
Thomas Meek

17th November 2014

From: Research, Sales

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