The U.S. Biopharma company AbbVie has struck the deal to acquire Botox maker Allergan PLC for $63 Billion. The combination of the two drug maker will open doors for diversification for AbbVie. The buying of Botox Maker will give them an $8 Billion plus the market for Botox and other beauty products.
AbbVie will be paying 45% premium to Monday’s closing price and will take on an additional $38 billion in debt. While the biopharma company is already in $38 Billion debt on its books at the end of the quarter and going towards Allergan, the company has lost half of its stock value last year.
For now, AbbVie generates 60% of its revenue from its anti-inflammatory drug Humira but there are similar products with lesser prices as compared to the brand. Chief Executive Officer Rick Gonzalez said that Humira’s sales will drop down to 40% after the deal closes. Mr. Gonzalez said that he wants to increase the company’s non-Humira drugs business.
The company’s CEO will remain the same. While two Allergan directors including Mr. Saunders will join AbbVie’s board when the deal closes. Regarding the payment, AbbVie will pay0.8660 AbbVie share and $120.30 in cash for each share they own, for a total consideration of $188.24 a share. This deal will knit two of the biggest pharmaceutical companies in the world. Earlier, Bristol-Myers Squibb Co. agreed to pay $74 billion for rival cancer drugmaker Celgene Corp.
AbbVie was looking for diversification after its split up from Abbott Laboratories in 2013. Finally, AbbVie has acquired a chance to diversify their business and become the next big thing in the pharmaceutical industry. In 2014, AbbVie tried to strike a deal with drugmaker Irish rare-disease drugmaker Shire for $54 billion but called off after a year.
Well after the acquisition, Allergan stock jumped 25% to $162.43 Tuesday while AbbVie shares fell 16% to $65.70.