NEW YORK: Actavis has agreed to buy Botox-maker Allergan AGN 1.24% in $66 billion in a cash and stock deal that could sideline a rival offer by Valeant Pharmaceuticals.
The deal would create a top-10 global pharmaceutical firm by sales revenue, with combined annual pro forma revenue of more than $23 billion anticipated in 2015. Actavis said it expects the deal will close in the second quarter of 2015. Actavis said it expects the deal with result in double-digit adjusted earnings growth within the first 12 months.
“Today’s transaction provides Allergan stock holds with substantial and immediate value,” said Allergen CEO David E.I. Pyott.
The merger is above the $54 billion Valeant offer. Valeant had first disclosed its offer to acquire Allergen in April, a takeover bid that won support from Allergan’s top shareholder, Bill Ackman’s hedge fund Pershing Square Capital Management LP. Pershing Square has sought to replace Allergan’s board with representatives that would favour the tax-inversion takeover with Canada-based Valeant. That structure would allow Valeant to squeeze additional value from the acquisition by moving Allergen’s headquarters from its current California home.
A Valeant representative wasn’t immediately available to comment on the Actavis-Allergan deal.
At stake is Allergan, which generated $5.33 billion in total revenue for the first nine months of this year, up from $4.62 billion in the prior-year period. Net earnings have also climbed from the year ago.
Actavis is planning to buy Allergan for a combination of $129.22 in cash and 0.3683 Actavis shares for each share of Allergen common stock. The deal has been approved by both boards of directors and is supported by the management teams at each of those companies. Actavis said through a combination of new equity and debt, it will be able to maintain an investment-grade rating.
