Healthcare Business

Allergan Accepts Buyout Offer From Actavis, Valeant Bows Out

Botox injection
Source: Thinkstock
Botox maker Allergan Inc. (NYSE: AGN), which has fended off offers up to about $173 per share from Valeant Pharmaceuticals International Inc. (NYSE: VRX), announced Monday morning that it has entered a definitive agreement to be acquired by Actavis PLC (NYSE: ACT) in an offer worth $219 a share and a transaction valued at $66 billion.

Valeant wasted no time in making a comment:

We have seen the announcement that Allergan and Actavis have made, and while we will review any such agreement in determining our course of action, Valeant cannot justify to its own shareholders paying a price of $219 or more per share for Allergan. … We will remain focused on delivering strong organic results and evaluating acquisition opportunities as we always have: prudently, in a disciplined manner, and in the best interests of our shareholders.

In other words, Actavis is willing to overpay for Allergan and we are not. Valeant’s last offer totaled about $179 per share, or $53 billion.

Brent Saunders, CEO of Actavis, 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 percent for the foreseeable future.

The offer from Actavis includes $129.22 in cash and 0.3683 shares of Actavis stock for each share of Allergan common stock. Actavis said it expects to finance the cash portion of the acquisition through a combination of new senior unsecured notes, term loans and equity securities.

The transaction requires approval from shareholders of each company and the usual antitrust clearance by U.S. regulators. The deal is expected to close in the second half of 2015.

Allergan’s shares were trading up about 6.8% early Monday morning, at $212.07 in a new 52-week range of $94.98 to $212.64.

Actavis shares traded higher by about 3.5%, at $252.32 in a new 52-week range of $156.40 to $254.58.

Valeant traded down about 0.8%, at $133.37 in a 52-week range of $105.17 to $153.10.

ALSO READ: 4 Top Specialty Pharmaceutical Stocks to Buy Before Earnings