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AbbVie sells $30bn of bonds ahead of Allergan merger

Will use net proceeds to fund cash consideration due to shareholders

AbbVie

AbbVie has sold $30bn worth of bonds to help fund its acquisition of Allergan, which was announced in in June this year. 

According to Bloomberg, AbbVie’s is the biggest bond sale of the year and also the fourth largest in history. AbbVie has said that the notes will be issued in ten tranches, and expects the closing of the offering on 21 November – subject to the satisfaction of customary closing conditions.

AbbVie will use the net proceeds from the sale to fund a portion of the cash consideration due to Allergan shareholders, in connection with the acquisition, and to pay related fees and expenses. Any remaining proceeds will be used for ‘general corporate purposes’.

The acquisition of Allergan was due largely to the impending US patent expiry of $20bn-a-year blockbuster Humira.

Although biosimilar versions of Humira won’t hit the US until 2023, AbbVie seized the opportunity to buy Allergan to expand and diversify its revenue base with new therapeutic areas.

That includes Allergan’s leading medical aesthetics business – with the most notable product being Botox – which earned $3.7bn in revenues last year.

When the merger was announced, AbbVie faced criticism for the move as analysts presented concerns that the deal is saddling the company with even more debt and doing little to add to its pipeline.

They highlighted that Allergan’s Botox is currently facing tougher competition in the market from new migraine drugs and rivals in its medical aesthetics indications.

However, AbbVie CEO Richard Gonzalez defended the takeover, saying that the company has already completed plenty of pipeline-building deals and has a new generation of projects due to read out between 2020 and 2022.

The Allergan deal, he maintained, has a different purpose – to allow AbbVie to gain “critical mass” in its growth platform.

To the companies dismay, this was far from the last bump in the road – in September, a number of advocacy groups and unions urged the Federal Trade Commission to block the $63bn merger.

In a letter penned to the FTC, the group expressed concerns that the merger could lead to the new company having too large of a market share in certain therapy areas, and could cause high drug prices to continue.

AbbVie’s chief legal officer Laura Schumacher told analysts “we don't anticipate any significant issues with the FTC approval process”, but added there are “a few small product overlaps that we've agreed to divest promptly”.

Article by
Lucy Parsons

13th November 2019

From: Sales

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