AbbVie poised to acquire Allergan for $63 billion
The industry has been rocked with the announcement of another pharmaceutical mega-merger, as it emerged that AbbVie had sealed an agreement with Allergan to acquire the latter for approximately $63 billion, making it one of the biggest mergers of its kind.
The total valuation of the deal is based on the closing price on 24 June of AbbVie’s common stock of $78.45, and will take the form of a cash and stock transaction. Once the deal is complete, Richard Gonzalez will continue to lead the newly merged entity under the AbbVie Inc name, while two members of Allergan’s board, including the company’s Chairman and CEO Brent Saunders, will take up positions on AbbVie’s board.
AbbVie said in a statement that, in the third year, it expects the deal to generate savings of at least $2 billion per year, including annual pre-tax synergies. These savings would come about from research and early-stage portfolio optimisation, elimination of R&D overlap and manufacturing redundancies between the two firms, and pushing for greater efficiency in selling, general and administration expenses. The company’s investments in key franchises would remain unaffected, the statement said.
“This is a transformational transaction for both companies and achieves unique and complementary strategic objectives,” commented AbbVie Chairman and CEO Richard A Gonzalez. “The combination of AbbVie and Allergan increases our ability to continue to deliver on our mission to patients and shareholders. 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.”
Brent Saunders, Allergan’s Chairman and CEO, also remarked: “This acquisition creates compelling value for Allergan’s stakeholders, including our customers, patients and shareholders. With 2019 annual combined revenue of approximately $48 billion, scale in more than 175 countries, an industry-leading R&D pipeline and robust cash flows, our combined company will have the opportunity to make even bigger contributions to global health than either can alone. Our fast-growing therapeutic areas, including our world class medical aesthetics, eye care, CNS and gastrointestinal businesses, will enhance AbbVie’s strong growth platform and create substantial value for shareholders of both companies.”
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