In another restructuring move, Actavis has acquired Allergan in a $66B deal (about $219 per share). This beat out a hostile bid by Valeant which is backed by activist investor, Bill Ackman. The transaction will make Actavis a $100 billion company, in comparison to the less than the $5 billion valuation it had at the end of 2009.
Investors initially reacted positively to the deal, as the stock price rose 1.7% to $247.94, reflecting the forecasted 10% sales growth. Actavis proposes to strategically move Allergan’s core products, Rhestasis for dry-eye and Botox injection, to an increased number of specialists who the Allergan sales team could not reach. The company also mentioned plans to aggressively promote Botox as a migrane medication, hoping to realize “untapped potential” of Allergan’s products.
Activis will see significant cost and tax savings as a result of the deal. CEO Brent Saunders recognized $1.8B in overlapping costs, including $400M in marketing and $400M in research and development. The corporate tax rate will be cut to about 15%, down from its current 26.5% rate. Saunders regards this transaction as “the best deal I’ve ever done in my career.”
Summary by MedicalGroups.com
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