AbbVie To Acquire Allergan for $63 BillionBy
AbbVie and Allergan have entered into a definitive transaction agreement under which AbbVie will acquire Allergan in a cash-and-stock transaction for a transaction equity value of approximately $63 billion, based on the closing price of AbbVie’s common stock of $78.45 on June 24, 2019.
The combined company would have 2019 annual combined revenue of approximately $48 billion and consist of several franchises in immunology, hematologic oncology, medical aesthetics, neuroscience, women’s health, eye care and virology.
With the acquisition, AbbVie says it expects its growth in its “growth platform,” comprised of growing and durable franchises across various therapeutic areas, to increase at a high single-digit annual rate over the next decade, from more than $30 billion in 2020.
Upon completion of the transaction, AbbVie will continue to be incorporated in Delaware and have its principal executive offices in North Chicago, Illinois. AbbVie will continue to be led by Richard A. Gonzalez as Chairman and Chief Executive Officer (CEO). Two members of Allergan’s Board, including Chairman and CEO, Brent Saunders, will join AbbVie’s Board upon completion of the transaction.
AbbVie anticipates that the acquisition will provide annual pre-tax synergies and other cost reductions of at least $2 billion in year three after closing. It says that the synergies and other cost reductions will be a result of: optimizing its research and early-stage portfolio by reducing overlapping research and development resources (approximately 50%); driving efficiencies in selling, general and administrative expenses, including sales and marketing and central support function costs (approximately 40%); and eliminating redundancies in manufacturing and supply chain and leveraging procurement spend (approximately 10%). The synergies estimate excludes any potential revenue synergies.
AbbVie says it expects to generate annual operating cash flow, which will support a debt- reduction target of $15 billion to $18 billion before the end of 2021 while also enabling a continued commitment to Baa2/BBB or better credit rating and continued dividend growth.
Under the terms of the transaction agreement, Allergan shareholders will receive 0.8660 AbbVie shares and $120.30 in cash for each Allergan share that they hold for a total consideration of $188.24 per Allergan share. Following closing, AbbVie shareholders will own approximately 83% of AbbVie on a fully diluted basis, and Allergan shareholders will own approximately 17% of AbbVie on a fully diluted basis.
The transaction is expected to close in early 2020, according to AbbVie. The transaction is subject to conditions set forth in certain provisions of the Irish Takeover Rules as well as certain regulatory approvals and approval by Allergan’s shareholders.