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Actavis buys Allergan for $66 billion

Published on 18/11/14 at 07:53am
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The stately dance between Actavis and Allergan has culminated in the former buying the Botox manufacturer in a $66 billion deal, creating a company with revenues of $23 billion.

The ‘financially compelling’ transaction, unanimously supported by board boards, is expected to close during the second quarter of 2015 and creates, Actavis says, “one of the world's top 10 pharmaceutical companies".

Actavis is paying $219 per share and the companies say the combined entity will have synergies of ‘at least’ $1.8 billion and an ‘R&D commitment’ of $1.7 billion – although there is no mention yet of job losses.

The combined company will be led by two senior Actavis figures: chief executive and president Brent Saunders and executive chairman Paul Bisaro.

Plans to turn the two companies into one will be led by the senior management teams of both and are to begin immediately, with two members of the Allergan board joining the Actavis board – but only after the deal goes through.

The arrangement brings to an end any chance of Canadian firm Valeant completing a hostile takeover of Allergan: its $54 billion offer – the latest of several attempts – from the company was rejected earlier this year.

"We will establish an unrivalled foundation for long-term growth, anchored by leading, world-class blockbuster franchises and a premier late-stage pipeline that will accelerate our commitment to build an exceptional, sustainable portfolio,” insists Saunders.

"Management is committed to maximising the potential for the combined company to drive industry-leading top and bottom line growth,” he continues.

Cash flow of more than $8 billion is expected in 2016, with “substantial growth thereafter, which will enable the rapid repayment of debt”.

Allergan brings products in ophthalmology, neurosciences and areas such as dermatology and plastic surgery to add to Actavis' existing CNS, gastroenterology and women's health franchises.

Outside the US, Bisaro says the combined company will “broaden our footprint in Canada, Europe and south-east Asia and other high-value growth markets, including China, India, the Middle East and Latin America".

For Allergan it is a chance to be part of a significantly larger entity. "Today's transaction provides Allergan stockholders with substantial and immediate value, as well as the opportunity to participate in the significant upside potential of the combined company," says Allergan chief executive David Pyott.

"We are combining with a partner that is ideally suited to realise the full potential inherent in our franchise,” he adds.

Adam Hill

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