AbbVie is buying Botox maker Allergan in a cash-and-stock deal valued at around $63 billion.

The maker of the blockbuster immune disorder treatment Humira said Tuesday that it will pay $120.30 in cash and a portion of AbbVie stock for each Allergan share. That amounts to $188.24 per share, or a 45% premium to Allergan's closing price Monday.

Shares of Allergan Plc, based in Dublin, Ireland, jumped nearly 30% before the opening bell.

AbbVie shareholders will own 83% of the specialty drug company combination after the deal's completion while Allergan shareholders will have a 17% stake.

Regulators and Allergan shareholders still have to approve the deal.

Shares of AbbVie Inc., based in North Chicago, Illinois, sank 10%. </s> Humira maker AbbVie is set to acquire Botox maker Allergan in another move toward consolidation for the pharmaceutical industry.

The deal calls for North Chicago, Illinois-based AbbVie to pay cash and stock worth about $63 billion for Dublin-based Allergan.

Together, the companies have projected 2019 revenue of about $48 billion, including AbbVie's haul from the Humira, a rheumatoid arthritis treatment that qualifies as the world's best-selling drug.

Their combination comes after failed attempts on behalf of both companies to pull off big acquisitions during the Obama administration, when federal regulators were closely scrutinizing mergers that involved foreign entities for the sake of tax benefits.

Allergan, for example, was set to be acquired by Pfizer in 2016 before that deal was scuttled.

Allergan spun off from Abbott Laboratories in 2013. More recently, the company had been expected to consider a potential split amid looming competition for wrinkle treatment Botox, according to Mizuho Securities analyst Irina Koffler.

AbbVie CEO and Chairman Richard Gonzalez will lead the combined company. Allergan CEO and Chairman Brent Saunders will serve on the combined company's board.

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The two companies estimated they will save about $2 billion annually by the third year of their combination, including cost cuts.

"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," Gonzalez said in a statement.

The deal comes as the latest in a string of acquisitions for the pharmaceutical industry. Other companies making deals recently have included Bristol-Myers Squibb and Eli Lilly. </s> (Reuters) - Drugmaker AbbVie Inc said on Tuesday it would buy Botox-maker Allergan Plc for about $63 billion, grabbing control of the biggest name in medical aesthetics to help reduce its reliance on blockbuster arthritis treatment Humira.

AbbVie has been under pressure to diversify its portfolio as Humira, the world’s best-selling drug, is already in competition with cheaper versions in Europe and faces expiration of its patents in 2023 in the United States, its most important market.

Humira, which brought in revenue of about $20 billion last year, reported the first fall in quarterly sales in years in the January-March period.

AbbVie CEO Richard Gonzalez said the company was well positioned to buy Allergan because of the massive amount of cash that Humira generates.

“Humira is buying the assets that replace it over the long term,” said Gonzalez, who will lead the combined company and remain chairman and chief executive through 2023.

Allergan Chief Executive Officer Brent Saunders, who put together the current version of his company through a series of deals to roll up several pharmaceutical firms in 2014, will join AbbVie’s board upon completion of the deal.

Saunders built his reputation as a dealmaker, but Allergan has struggled since Pfizer Inc walked away from a $160 billion deal in 2016. Allergan’s shares have lost around half their value since then.

He has been under pressure over the last year to break up or sell the company, with activist investor David Tepper running a campaign to urge Allergan to hire an independent chairman.

Investors have also questioned Saunders’ growth plans beyond acquisitions and the quality of the company’s drug pipeline.

On a conference call, Gonzalez said the deal was not a pipeline-driven transaction, and AbbVie executives downplayed the role Allergan’s experimental drugs would play in the combined company.

Shares of AbbVie have also languished, losing more than a third of their value from highs hit in January 2018 over concerns about competition to Humira.

The deal, which comes months after Bristol-Myers Squibb Co agreed to buy Celgene Corp in a $74 billion transaction, will redomicile Dublin-based Allergan to the United States.

AbbVie and Allergan senior management had been discussing a possible deal since late April, the companies said.

Allergan remains an industry leader in aesthetics, and is likely to be the cornerstone of AbbVie’s valuation, SVB Leerink analyst Geoffrey Porges said in a note.

“This is yet another transaction driven by diversification, scale and low borrowing costs, rather than portfolio or top line synergies,” Porges said.

Allergan shareholders will receive 0.8660 AbbVie shares and $120.30 in cash for each share held, for a total consideration of $188.24 per Allergan share, a premium of 45% to the stock’s Monday close. Including debt, the deal values Allergan at $83 billion.

AbbVie shares were down 14% at $67.54, while Allergan’s stock was up 27.60% at $165.13 in morning trading. Shares of other specialty pharmaceutical companies also moved higher.

Mylan NV, Bausch Health Co Inc and Teva Pharmaceutical Ltd were all up 2% to 4%.

AbbVie’s offer price is a far cry from Pfizer’s all-stock offer for Allergan that valued the Ireland-based drugmaker at $363.63 per share in 2015.

AbbVie said it expects annual pretax savings and other cost reductions of at least $2 billion in its third year, after the deal closes in early 2020.

The transaction is expected to add 10% to adjusted earnings per share over the first full year following the close, the companies said.

The deal was a better-than-expected outcome for Allergan as investors and analysts were expecting a split, Cantor Fitzgerald analyst Louise Chen wrote in a note, adding that it is unlikely that anyone else will step in and bid for Allergan at this point. </s> AbbVie Inc is nearing a deal to buy Botox-maker Allergan PLC for more than US$60 billion, the Wall Street Journal reported on Tuesday, citing people familiar with the matter.

REUTERS: Drugmaker AbbVie Inc said on Tuesday it would buy Botox-maker Allergan Plc for about US$63 billion, grabbing control of by far the biggest name in medical aesthetics to help reduce its reliance on blockbuster arthritis treatment Humira.

AbbVie has been under pressure to diversify its portfolio as Humira, the world's best-selling drug, faces competition from cheaper versions in Europe.

Allergan Chief Executive Officer Brent Saunders put together the current version of the company through a series of deals to roll up several pharmaceutical firms in 2014, and has run the company since then.

He built his reputation as a dealmaker, but his company has struggled since Pfizer Inc walked away from a US$160 billion deal to buy Allergan in 2016. Allergan's shares have lost around half their value since then.

Saunders has been under pressure over the last year to break up the company, with activist investor David Tepper running a campaign to urge Allergan to hire an independent chairman.

Allergan shareholders will receive 0.8660 AbbVie shares and US$120.30 in cash for each share held, for a total consideration of US$188.24 per Allergan share, a premium of 45per cent to the stock's Monday close.

AbbVie shares were trading down 10.5per cent at US$70.50, while Allergan shares were up nearly 28.4per cent in early trading.

Maxim Jacobs, director of research for North America at Edison Investment Research, said the deal provides AbbVie with a set of assets to help diversify away from Humira at a very reasonable price.

"In return, Allergan shareholders get a decent premium to what has been an outrageously low stock price," Jacobs said.

AbbVie will continue to be incorporated in Delaware as AbbVie Inc and will be led by Richard Gonzalez as chairman and chief executive officer.

Saunders and another member of Ireland-based Allergan's board will join AbbVie's board upon completion of the transaction.

The deal is expected to add 10per cent to adjusted earnings per share over the first full year following the close, the companies said. </s> Drugmaker AbbVie said Tuesday it would buy Botox maker Allergan for about $63 billion, grabbing control of by far the biggest name in medical aesthetics to help reduce its reliance on blockbuster arthritis treatment Humira.

Allergan chief executive officer Brent Saunders put together the current version of the company through a series of deals to roll up several pharmaceutical firms in 2014, and has run the company since then.

He built his reputation as a dealmaker, but his company has struggled since Pfizer walked away from a $160 billion deal to buy Allergan in 2016. Allergan’s shares have lost around half their value since then.

Saunders has been under pressure over the last year to break up the company, with activist investor David Tepper running a campaign to urge Allergan to hire an independent chairman.

Allergan shareholders will receive 0.8660 AbbVie shares and $120.30 in cash for each share held, for a total consideration of $188.24 per Allergan share, a premium of 45% to the stock’s Monday close.

AbbVie shares were trading down 10.5% at $70.50, while Allergan shares were up nearly 28.4% in early trading.

Maxim Jacobs, director of research for North America at Edison Investment Research, said the deal provides AbbVie with a set of assets to help diversify away from Humira at a very reasonable price.

“In return, Allergan shareholders get a decent premium to what has been an outrageously low stock price,” Jacobs said.

AbbVie will continue to be incorporated in Delaware as AbbVie Inc. and will be led by Richard Gonzalez as chairman and chief executive officer.

Saunders and another member of Ireland-based Allergan’s board will join AbbVie’s board upon completion of the transaction.

The deal is expected to add 10% to adjusted earnings per share over the first full year following the close, the companies said. </s> By Tom Murphy, The Associated Press

Facing competition for the world’s top-selling drug, AbbVie will spend about $63 billion to buy Botox maker Allergan as it attempts to spur future growth.

The specialty drugmaker said Tuesday that the addition of Allergan’s established product lineup will help AbbVie shore up revenue as near-identical biosimilar drugs start to eat away at sales of its global blockbuster immune disorder treatment Humira.

Allergan was long based in Orange County until it was acquired in 2014 by Actavis Plc for $66 billion. Its base shifted to Dublin, Ireland, though the company still maintains a large research and development division in Irvine.

Humira logged in a staggering $20 billion in sales last year accounting for about 61 percent of AbbVie’s total revenue. But global sales of the drug slipped in the first quarter due to competition, and Humira could face biosimilars in the United States — by far its largest market — by 2023.

AbbVie Chairman and CEO Richard Gonzalez told analysts Tuesday that the deal essentially involves Humira “buying the assets that replace it over the long term.”

“It really serves a purpose to eliminate any reliance on Humira,” he said.

Industry analysts had been anticipating a move by AbbVie.

“We are unsurprised by the timing and the target of the deal given (AbbVie’s) Humira patent cliff,” wrote Citi analyst Andrew Baum.

Shares of AbbVie are down 16% over the past year and shares of Allergan, with sales growth down over the past three quarters, have fallen 24%.

AbbVie will pay $120.30 in cash and a portion of AbbVie stock for each Allergan share. That amounts to $188.24 per share, or a 45% premium to Allergan’s closing price Monday.

Gonzalez will remain chairman and CEO at AbbVie. Two members of Allergan’s board, including chairman and CEO Brent Saunders, will join AbbVie’s board once the deal closes.

AbbVie shareholders will own 83% of the specialty drug company combination after the deal’s completion, while Allergan shareholders will have a 17% stake.

Regulators and Allergan shareholders still have to approve the deal.

Gonzalez told investors Tuesday that the deal does not come with a lot of risk for his company because of Allergan’s product portfolio.

AbbVie examined Allergan’s portfolio “product by product” and Gonzalez said they were particularly impressed with the job Allergan has done with Botox, which he said is unlikely to face similar competition.

“They’ve lost some share, but it’s relatively modest,” he said. “They’ve done an excellent job protecting the brand.”

The pharmaceutical industry has been consolidating and that, according to some experts, has the potential to boost prices.

“When drug companies merge, the first place they look for cost savings is in research and development because it is expensive and the payoffs are uncertain,” said Erik Gordon, a professor at the University of Michigan’s Ross School of Business who follows the pharmaceutical industry.

That could also create future competition, however, when other companies with a higher risk tolerance push for new drug discoveries.

Shares of Allergan, based in Dublin, Ireland, soared 21 percent Tuesday, while AbbVie Inc., based in North Chicago, Illinois, tumbled 15 percent. </s> PARIS: US biopharmacy company AbbVie said on Tuesday it had agreed to buy Allergan , the maker of Botox, in a stock and cash operation worth about $63 billion.The offer represents a 45 per cent premium over Monday's share price of Irish-registered Allergan, whose management recommended the operation to shareholders.The deal, which AbbVie CEO Richard Gonzalez called "transformational", is to close early in 2020.The combined companies will generate around $48 billion in revenues this year, AbbVie said."Combining Allergan's diversified on-market product portfolio with AbbVie's growth platform and deep expertise in R&D, commercial strength and international footprint will create a leading biopharmaceutical company," it said.The new company would boost earnings per share by 10 per cent in its first year, the US company predicted.AbbVie's main areas of expertise are immunology, oncology, virology and neuroscience.Allergan, best known for the hugely popular cosmetic treatment Botox, specialises in the areas of medical aesthetics, eye care, central nervous system and gastroenterology.Its portfolio also includes Humira, a best-selling treatment for rheumatoid arthritis. </s> Facing competition for the world’s top-selling drug, AbbVie is jumping on this year’s pharmaceutical merger bandwagon with a $63 billion bid for Botox maker Allergan that is meant to spur future growth.

Specialty drugmaker AbbVie said Tuesday that adding Allergan’s aesthetics products and eye care and other medicines will help AbbVie shore up revenue as near-identical biosimilar drugs start to slash sales of its blockbuster immune disorder treatment, Humira.

Humira logged a staggering $20 billion in sales last year, or about 61% of AbbVie’s revenue. That dangerous dependence on one drug forced AbbVie to make a big move. Allergan’s management likewise has been under pressure to reverse a long stock plunge, from $340 per share in July 2015 to about $130 this week.

The combination could solve those problems for AbbVie Inc., based in North Chicago, Ill., and Allergan, which is based in Dublin on paper but operates from headquarters in Madison, N.J. The acquisition should also mean Allergan officially moves back home, after having switched its legal headquarters to Ireland in a tax-saving strategy.

The deal follows a familiar formula: Snap up a smaller drugmaker to boost revenue and cut jobs and other costs in the short term, while acquiring potential new drugs in testing that will improve results and accelerate growth down the road.

That consolidation has the potential to boost prices, said Erik Gordon, a professor at the University of Michigan’s Ross School of Business who follows the pharmaceutical industry.

AbbVie has repeatedly hiked Humira’s monthly list price, from $1,524 in 2009 to $5,174 this year, to squeeze extra billions from it.

AbbVie Chairman and CEO Richard Gonzalez told analysts Tuesday that the deal essentially involves Humira “buying the assets that replace it over the long term.”

Those include Botox, which saw sales jump 50% last year to $3.5 billion, dry eye blockbuster Restatis and medicines for dermatology and gastrointestinal disorders.

Humira, which treats rheumatoid arthritis, psoriasis and colitis, saw sales slip in the first quarter due to growing biosimilar competition overseas. It will face at least a half-dozen biosimilar competitors in the United States — by far its largest market — in 2023.

Gonzalez said AbbVie examined Allergan’s portfolio “product by product” and was particularly impressed with the job Allergan has done with Botox. Along with reducing wrinkles temporarily, Botox is approved to treat a growing number of medical conditions, including migraines and muscle spasms.

Industry analysts had been anticipating a move by AbbVie.

“We are unsurprised by the timing and the target of the deal given (AbbVie’s) Humira patent cliff,” wrote Citi analyst Andrew Baum.

Morningstar analyst Damien Conover wrote that the deal will partially alleviate worries about Humira. He believes AbbVie also is taking advantage of Allergan’s low stock price.

readFull Shares of AbbVie are down 16% over the past year and shares of Allergan have fallen 24%, amid declining sales growth over the past three quarters and the failure of an experimental depression drug in March. AbbVie will pay $120.30 in cash and a portion of AbbVie stock for each Allergan share. That amounts to $188.24 per share, or a 45% premium to Allergan’s closing price Monday. Gonzalez will remain chairman and CEO at AbbVie. Allergan Chairman and CEO Brent Saunders, plus a second Allergan board member, are to join AbbVie’s board. Regulators and Allergan shareholders still have to approve the deal — hardly a slam-dunk, as regulators have been increasingly tough on pharma deals. In early March, Swiss drugmaker Roche won a bidding war for gene therapy company Spark Therapeutics. But its $4.8 billion deal, expected to close at the end of this month, has been held up repeatedly by information requests from the Federal Trade Commission and its British counterpart. In the biggest deal this year, Bristol-Myers Squibb is trying to complete its $74 billion deal for Celgene, a New Jersey neighbor also focused on cancer therapies. Bristol-Myers recently said the deal might not close until next year. Linda A. Johnson and Tom Murphy are Associated Press writers. </s> (Reuters) - Drugmaker AbbVie Inc said on Tuesday it would acquire Allergan Plc for about $63 billion, giving AbbVie control over the lucrative wrinkle treatment Botox and buying time to seek new growth before its blockbuster arthritis treatment Humira loses U.S. patent protection.

AbbVie has long been under pressure to diversify its portfolio and its shares have lost more than a third of their value since January 2018 over concerns about Humira.

The world’s top-selling drug brought in sales of $20 billion last year. But it now faces competition from cheaper versions in Europe and a 2023 expiration of its patents in the United States, by far the most profitable market.

AbbVie Chief Executive Richard Gonzalez said the company was able to buy Allergan because of the massive amount of cash that Humira generates. A U.S. corporate tax overhaul under the Trump administration, which helped companies bring back revenue earned overseas, also helped, he said.

“Humira is buying the assets that replace it over the long term,” said Gonzalez, who plans to lead the combined company and remain chairman and CEO through 2023.

Chief among those assets is Allergan’s Botox, an injection of a purified form of botulinum toxin that paralyzes muscles, smoothing frown lines and wrinkles in the forehead and around the eyes. It is also approved to treat chronic migraine headaches, overactive bladder and other medical uses.

But when used as a cosmetic treatment, patients must pay for Botox out of pocket, buffering it from the pricing pressure that health insurers and government health agencies have put on prescription medicines. Gonzalez said he does not expect a biosimilar version of Botox “for a long, long time, if ever.”

Botox had 2018 sales of about $3.6 billion, with $1.55 billion coming from cosmetic uses. Both therapeutic and cosmetic Botox are expected to keep growing, with analysts forecasting total 2019 sales of $3.9 billion and reaching nearly $6 billion by 2025, according to Refinitiv data.

“We believe the increasing concern about AbbVie’s growth potential following the U.S. Humira biosimilar competition in 2023 will be partially alleviated with the increased portfolio of assets that Allergan brings,” said Morningstar analyst Damien Conover.

The deal, coming months after Bristol-Myers Squibb Co agreed to buy Celgene Corp for $74 billion, also highlights renewed interest in major acquisitions by the pharmaceutical industry.

Shares of other specialty drugmakers and potential targets Mylan NV, Bausch Health Co Inc and Teva Pharmaceutical Industries Ltd rose, with Teva up 7.6%.

AbbVie shares were down 15.7% at $66.11, while Allergan shares were up 26.7% at $164.20.

FILE PHOTO: The Allergan logo is seen in this photo illustration in Singapore November 23, 2015. REUTERS/Thomas White/File Photo

MAJOR ACQUISITION NEEDED

AbbVie’s board decided about a year ago that the company needed a major acquisition ahead of Humira’s U.S. patent expiration, Gonzalez said.

He said he first approached Allergan CEO Brent Saunders six or seven weeks ago. In late April, Saunders traveled to Chicago for a meeting and returned a few weeks later to discuss valuation.

AbbVie was looking for a partner with $10 billion to $15 billion in durable revenue that was not expected to decline. Allergan 2019 sales are forecast to be about $15 billion.

The motivation for this deal differs significantly from AbbVie’s unsuccessful bid in 2014 to buy Irish drugmaker Shire Plc. At that time, AbbVie was looking to take advantage of lower corporate tax rates in Europe, Gonzalez said.

Allergan, formerly based in California, itself was part of a tax “inversion” deal, after European generic drugmaker Actavis bought Allergan for $66 billion in 2015 and adopted the Botox-maker’s name, moving its headquarters to Dublin.

The combined AbbVie and Allergan will be based in AbbVie’s home of North Chicago.

“The fact that we had tax reform (in the United States) allowed us … to take the company back to the U.S. It reinforces the benefit of tax reform,” Gonzalez told reporters.

ALLERGAN ISSUES

The deal follows a string of acquisitions for Allergan under Saunders, who will join AbbVie’s board. Over the last decade, Saunders remade Allergan into one of the world’s biggest pharmaceutical companies, but also saddled it with debt, leaving it less able to invest in research and development

His efforts culminated in a proposed $160 billion purchase by Pfizer Inc. But Pfizer walked away from the transaction in 2016 after the Obama administration cracked down on U.S. companies’ ability to rebase in countries with lower tax rates.

Allergan has since struggled to find new growth. Its shares have lost around half their value and shareholders have pressured Saunders to break up or sell the company. Activist investor David Tepper also ran a campaign urging Allergan to hire an independent chairman.

Under terms of the deal, Allergan shareholders will receive 0.8660 AbbVie shares and $120.30 in cash for each share held, for a total of $188.24 per Allergan share, a premium of 45% to the stock’s Monday close. Including debt, the deal values Allergan at $83 billion.

The transaction is expected to add 10% to AbbVie’s adjusted earnings per share over the first full year following the close, the companies said.

FILE PHOTO: A screen displays the share price for drugmaker AbbVie on the floor of the New York Stock Exchange July 18, 2014. REUTERS/Brendan McDermid/File Photo

AbbVie said it expects annual pretax savings and other cost reductions of at least $2 billion in its third year after the deal closes in early 2020. Some cost savings are likely to come cuts to Allergan’s research and development operations.

“This is yet another transaction driven by diversification, scale and low borrowing costs, rather than portfolio or top line synergies,” SVB Leerink analyst Geoffrey Porges said in a note.

Morgan Stanley and PJT Partners were financial advisers to AbbVie, while Kirkland & Ellis provided legal advice. JPMorgan Chase & Co was Allergan’s financial adviser, and its legal counsel were Wachtell, Lipton, Rosen & Katz and Arthur Cox.
AbbVie, the Illinois-based pharmaceutical company best known for Humira, announces its plan to purchase Allergan, the maker of Botox, for about $63 billion.