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Home / Business / AbbVie signs contract for the purchase of Allergan for approximately $ 63 billion

AbbVie signs contract for the purchase of Allergan for approximately $ 63 billion



AbbVie
Inc.


ABBV -0.42%

have entered into a sales agreement

Allergan


AGN -0.95%

PLC for about $ 63 billion, as the two major drug companies will, through a combination, open up new sources of growth that they find difficult to find themselves.

The acquisition has a value of approximately $ 1

88 per share in cash and in shares, the companies said in a statement. The price is equivalent to a 45% premium over Allergan's closing price on Monday of $ 129.57. Without an increase in stocks in recent days due to expectations for a break-up of the company, the premium would be even higher.

The Wall Street Journal reported on Tuesday that the deal was imminent.

The Dublin-based Allergan acquisition would command a dominant position in the $ 8 billion market for Botox and other beauty medicines and a number of popular medicines eye treatments as AbbVie sets the end of patent protection for Humira, the world's top-selling drug ,

Company portfolios overlap in treatments for brain, women's health, stomach and other diseases. Join AbbVie in the new field of frown smoothing, eyelash lengthening and double chin removal.

With annual sales of nearly $ 16 billion, AbbVie could also tap into another source of funding for finding a new generation of products.

Recently, Wall Street has been struggling for change at Allergan, as its shares traded in the summer of 2015 at a fraction of its peak of over $ 330. Analysts said the company could be split in two. But few expect CEO Brent Saunders to sell, especially at such a high price.

Richard Gonzalez will remain chairman and CEO of AbbVie. Two Allergan directors, including Mr. Saunders, will join AbbVie's board when the deal is completed.

Approximately two-thirds of the purchase price is payable in cash, with Allergan shareholders receiving 0.8660 AbbVie shares and $ 120.30 in cash for each share they own, for a total price of $ 188.24 per share Share.

Allergan shares rose 29% before IPO, while AbbVie shares fell more than 8% to $ 78.45.

The $ 80 billion deal including debt is the second this year to bring together two of the world's largest pharmaceutical companies. Earlier this year,

Bristol-Myers Squibb
Co.

agreed to pay 74 billion dollars for competing anticancer drugs

Celgene
Corp.

AbbVie, located in the suburbs of Chicago, has been following deals of various sizes since the company's split, in order to diversify beyond Humira

Abbott Laboratories

in 2013.

Humira, a treatment for rheumatoid arthritis, achieved sales of $ 19.1 billion ($ 32.8 billion) last year. But cheaper versions, so-called biosimilars, are available in Europe and should come in 2023 in the US in the trade.

AbbVie had attempted to close big business in 2014 when an agreement was made to buy Irish drug addict Shire for rare diseases for $ 54 billion. But AbbVie announced the deal later this year, as the Obama administration tried to restrict such tax cutbacks known as inversions.

Other attempts to find new high-volume cancer, immune, and other medicines have failed, with the exception of Pharmaclc Inc., the maker of Imbruvica cancer therapy, signing a $ 20 billion contract in 2015 , AbbVie communicates the rights of treatment

Johnson & Johnson
.

But Imbruvica, which generated $ 3.6 billion in revenue for AbbVie last year, can not offset Humira's approaching revenue loss alone.

In Allergan, AbbVie will hire a once-controversial drug company, which also had trouble finding new revenue growth.

Allergan's stock more than doubled its current level four years ago when the company and Mr. Saunders became Wall Street favorites after a series of bold acquisitions. However, Allergan's luster has waned in recent years as the ability to close deals with the stock has decreased and only the aesthetic drug business has grown to the satisfaction of investors.

Allergan, which began as a Californian pharmacy and then formed a niche As an ophthalmic company that rose to the rank of major drug manufacturers after taking advantage of Botox's use to smooth frowning and wrinkles.

A combination with the Irish drug maker Actavis in 2015 transformed the company. Mr. Saunders has been CEO since 2014 and Chairman since 2016.

Pfizer
Inc.

I wanted to buy Allergan for about $ 150 billion, but this transaction, also a reversal, had failed under pressure from the Obama administration.

Then, investors worried about the company, fearing that it would be unable to replace sales of the eye drug Restasis, which lost its patent protection, to strengthen Restasis by selling its patent rights to an Indian tribe and mixed management messages the prospects of the company. Competitors are trying to gain a foothold in Botox, and the company's efforts to develop new drugs such as depression treatment have failed.

The concerns triggered pressure from Wall Street. Mr. Saunders said on the company's earnings statement last month that there was a sense of urgency within the company and promised that the board would review all options.

Analysts predicted that Allergan could divide itself into two parts, with a deal dedicated to quick sales. Growing brands and segments such as aesthetics and eye care as well as treatments for the gastrointestinal tract and women's health.

Allergan has come into the crosshairs of David Tepper's active hedge fund Appaloosa Management LP over the last few years, criticizing the company's performance and pressuring it to separate the roles of chairman and CEO. The company had announced to separate the roles in its next change of leadership. In May, Allergan shareholders voted against a shareholder proposal from Appaloosa to separate positions.

In order to satisfy its investors, Allergan last year tried to sell the drug business for women and to combat infections. In January, however, Allergan announced that it would retain the unit.

Write to Cara Lombardo at cara.lombardo@wsj.com, Jonathan D. Rockoff at Jonathan.Rockoff@wsj.com and Dana Cimilluca at dana.cimilluca@wsj.com.


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