Abbvie to acquire Allergan after entering into a definitive transaction agreement under which AbbVie will acquire the company 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.
In what is being called a transformative move for both companies, the strategic rationale includes:
- New growth platforms and leadership positions to diversify and expand revenue base: The combined company will consist of several attractive franchises with leadership positions across immunology, haematologic oncology, medical aesthetics, neuroscience, women’s health, eye care and virology. Allergan’s product portfolio will be enhanced by AbbVie’s commercial strength, expertise and international infrastructure.
- Immediate scale and enhanced profitability for AbbVie’s growth platform: AbbVie’s enhanced growth platform, comprised of growing and durable franchises across highly-attractive therapeutic areas, is expected to grow at a high-single digit annual growth rate well into the next decade, from more than $30 billion in 2020.
- Financially attractive with immediate EPS accretion: The transaction is expected to be 10% accretive to adjusted earnings per share over the first full year following the close of the transaction, with peak accretion of greater than 20%. ROIC is expected to exceed AbbVie’s cost of capital within the first full year.
- Significant cash flow generation: The success and scale of the combined commercial business ensures funding capacity and flexibility for simultaneous robust pipeline investment, debt reduction and capital return to shareholders. The combined companies generated $19 billion in operating cash flow in 2018.
“This is a transformational transaction for both companies and achieves unique and complementary strategic objectives,” said Richard A. Gonzalez, Chairman and Chief Executive Officer, AbbVie.
“The combination of AbbVie and Allergan increases our ability to continue to deliver on our mission to patients and shareholders. With our enhanced growth platform to fuel industry-leading growth, this strategy allows us to diversify AbbVie’s business while sustaining our focus on innovative science and the advancement of our industry-leading pipeline well into the future.”
“This acquisition creates compelling value for Allergan’s stakeholders, including our customers, patients and shareholders. With 2019 annual combined revenue of approximately $48 billion, scale in more than 175 countries, an industry-leading R&D pipeline and robust cash flows, our combined company will have the opportunity to make even bigger contributions to global health than either can alone,” said Brent Saunders, Chairman and Chief Executive Officer, Allergan.
“Our fast-growing therapeutic areas, including our world class medical aesthetics, eye care, CNS and gastrointestinal businesses, will enhance AbbVie’s strong growth platform and create substantial value for shareholders of both companies.”