Dublin-based Actavis, a global, integrated, specialty pharmaceutical company has announced it will acquire Allergan, a multi-specialty healthcare company based in Irvine, Calif., for approximately $66 billion, or $219 per share.
Actavis will pay a combination of $129.22 in cash and 0.3683 Actavis shares for each share of Allergan common stock, based on Actavis’ Nov. 14 closing price.
The combination will create one of the top 10 global pharmaceutical companies by sales revenue, with combined annual pro forma revenues of more than $23 billion anticipated in 2015. The transaction has been unanimously approved by the boards of directors of Actavis and Allergan, and is supported by the management teams of both companies. Actavis anticipates the expected permanent financing structure, consisting of a combination of new equity and debt, will support an investment grade rating and provide long-term financing flexibility.
"We will establish an unrivaled foundation for long-term growth, anchored by leading, world-class blockbuster franchises and a premier late-stage pipeline that will accelerate our commitment to build an exceptional, sustainable portfolio,” said Brent Saunders, CEO and president of Actavis. “The combined company will have a strong balance sheet, growing product portfolios and broad commercial reach extending across 100 international markets. Our combined experienced management team is dedicated to driving strong organic growth while capturing synergies and maintaining a robust investment in strategically focused R&D.”
"This is a financially compelling transaction,” he said. “With pro forma revenues in excess of $23 billion anticipated in 2015, this combination doubles the revenue generated by our brands business and doubles the international revenue of the combined company. Management is committed to maximizing the potential for the combined company to drive industry-leading top and bottom line growth. With this combination, we plan to transform the growth profile of our pharmaceutical business and have the ability to generate organic revenue growth at a compound annual growth rate of at least 10% for the foreseeable future. The combination is expected to generate strong free cash flow of more than $8 billion in 2016 and substantial growth thereafter, which will enable the rapid repayment of debt. We expect that the combination will result in double-digit accretion to non-GAAP earnings within the first 12 months."
David E. I. Pyott, chairman and CEO of Allergan, said, “Together with Actavis, we are poised to extend the Allergan growth story as part of a larger organization with a broad and balanced portfolio, a meaningful commitment to R&D, a strong pipeline and an unwavering focus on exceeding the expectations of patients and the medical specialists who treat them.”
"This combination will greatly enhance our U.S. and international commercial opportunities," said Paul Bisaro, executive chairman of Actavis. "In the U.S., the combination makes us more relevant to an even broader group of physicians and customers. Overseas, it will enhance our commercial position, expand our portfolio and broaden our footprint in Canada, Europe and Southeast Asia and other high-value growth markets, including China, India, the Middle East and Latin America."
The combined company will be led by Saunders, and Bisaro will remain executive chairman of the board. The integration of the two companies will be led by the senior management teams of both companies, with integration planning to begin immediately to transition rapidly to a single company. Additionally, two members of the Allergan board of directors will be invited to join the Actavis board.
The addition of Allergan's portfolio, including multiple blockbuster therapeutic franchises, doubles the revenues of Actavis' North American Specialty Brands business. On a pro forma basis for full year 2015, the combined company will have three blockbuster franchises each with annual revenues in excess of $3 billion in ophthalmology, neurosciences/CNS and medical aesthetics/dermatology/plastic surgery. The specialty product franchises in gastroenterology, cardiovascular, women's health, urology and infectious disease treatments will have combined revenues of approximately $4 billion.
Actavis projects the transaction will generate at least $1.8 billion in annual synergies commencing in 2016, in addition to the $475 million of annual savings previously announced by Allergan in connection with Project Endurance. Actavis also plans to maintain annual R&D investment of approximately $1.7 billion, ensuring the appropriate resource allocation to continue driving exceptional organic growth.