American drugmaker AbbVie announced last week that it planned to purchase Allergan for $63 billion US (around $90 billion AUD), in one of the largest pharmaceutical mergers of late. AbbVie has committed to pay $US188.24 a share for Allergan, representing a 45% premium over Allergan’s closing price of $129.57 last Monday.
“This is a transformational transaction for both companies and achieves unique and complementary strategic objectives,” said Richard A. Gonzalez, AbbVie’s chief executive. Mr. Gonzalez will remain as chief executive, with Allergan’s chief executive Brent Saunders joining AbbVie’s board.
AbbVie’s sales are dominated by Humira, the top-selling rheumatoid arthritis injection.
Mr. Gonzalez said last week that the deal “will have a profound impact on AbbVie’s overall growth story, while addressing concerns about the company’s reliance on Humira.” The sale is also set to diversify much in the same way for Allergan, beyond its aesthetic portfolio. The companies’ portfolios currently have almost no overlap.
Allegedly, AbbVie has been on the hunt for a deal like this since 2013. There are also suggestions that Saunders has been in search of a similar mutually beneficial deal for many months for Allergan, since the drugmaker’s stock price has been dropping from a peak in 2015. Analysts even suggested that Allergan may split itself down the middle, with one catering to aesthetics and the other to gastrointestinal and women’s health.
Allergan stock has now jumped over the past few days since the announcement, while AbbVie shares fell. The deal means Allergan shareholders will receive 0.8660 AbbVie shares, plus $120.30 US for each share. AbbVie will also be taking on Allergan’s debt, which totalled around $24 billion at the end of the first quarter.
Reports suggest that the deal is set to close early 2020 – stay tuned for more info as it happens!