AbbVie Set to Acquire Allergan in $63 Billion Deal

In a time of mounting pressure from stakeholders to diversify its portfolio, AbbVie recently announced that the company has entered into a transaction agreement to acquire Allergan in a cash and stock deal worth approximately $63 billion.  

The acquisition, based on AbbVie’s closing common stock price of $78.45 on June 24, 2019, offers opportunities to both companies to expand markets and diversify revenue bases in new therapeutic areas and is set to finalize in 2020.

AbbVie is preparing to face the loss of patent protection of its top selling autoimmune drug, Humira (adalimumab), which is responsible for 60% of the company’s $32.8 billion in sales last year. The company expects to see increased competition when lower-priced versions of the treatment become available in the United States in 2023. Biosimilars are already available oversees. 

“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,” said Brent Saunders, chairman and chief executive officer, Allergan, in a press release.  “Our fast-growing therapeutic areas, including our world class medical aesthetics, eye care, CNS [central nervous systems], and gastrointestinal businesses, will enhance AbbVie’s strong growth platform and create substantial value for shareholders of both companies.” 

A joint press release from AbbVie and Allergan stated that Allergan shareholders will receive 0.8660 AbbVie shares and $120.30 in cash for each Allergan share, for a total consideration of $188.24 per Allergan share.

Mr Saunders has also been under pressure to make moves for Allergan, which has struggled since Pfizer pulled out of a $160 billion deal in 2016 due to pushback from the Obama administration. This deal with AbbVie is expected to add 10% adjusted earnings per share over the first full year.

“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,” said Richard A Gonzalez, chairman and chief executive officer, AbbVie, in a press release.

Mr Gonzalez is expected to helm the combined company and remain chairman and chief executive through 2023. Mr Saunders will join Abbvie’s board along with an additional Allergan director. —Edan Stanley