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On June 25, AbbVie (ABBV) announced that it plans to buy Allergan (AGN) for ~$63 billion. At 10:20 AM ET, Allergan stock rose 27%, while AbbVie stock fell 15%.
(Bloomberg) -- AbbVie Inc.’s 15% drop after announcing a deal to pay $63 billion for Botox maker Allergan Plc may bring on deja vu for some investors who are still feeling the burn from the drugmaker’s last deal blowup.While the purchase would provide a band-aid of sorts for beaten-down AbbVie, investors can’t help but remember how the company’s purchase of Stemcentrx Inc. for $5.8 billion went up in flames. That deal, and its subsequent write off in January after drug-development stumbles, drew criticism from Wall Street analysts and ramped up pressure on management.Fast forward to Tuesday, where AbbVie’s intraday move wiped out as much as $18.4 billion in market value, more than the value ascribed to all but nine companies in the closely-watched Nasdaq Biotech Index. “Financial engineering doesn’t make a more attractive pipeline,” SVB Leerink analyst Geoff Porges wrote in a research note.Other analysts say the Allergan deal looks more like a cosmetic fix than a long-term solution. “Two turkeys don’t make an eagle,” Piper Jaffray analyst Christopher Raymond said.To contact the reporter on this story: Bailey Lipschultz in New York at email@example.comTo contact the editors responsible for this story: Catherine Larkin at firstname.lastname@example.org, Scott SchnipperFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
The biopharmaceutical company AbbVie plans to acquire Allergan, the maker of Botox, for approximately $63 billion in cash and stock.
The size of Royal Caribbean Cruises Ltd. (NYSE:RCL), a US$25b large-cap, often attracts investors seeking a reliable...
AbbVie stock has sported an attractive dividend yield since its 2012 spinoff from Abbott. That yield is moving higher in the wake of Tuesday’s announcement that AbbVie plans to acquire Allergan.
(Bloomberg) -- AbbVie Inc. has agreed to pay $63 billion for rival drugmaker Allergan Plc, the latest merger in an industry where some of the biggest companies have been willing to pay a high price to resolve questions about their future growth.Allergan will get $188.24 a share in cash and stock, according to a statement announcing the deal, a 45% premium to its closing price on Monday. AbbVie declined as much as 15% to $65.56, the biggest intraday drop since 2015. Allergan shares climbed as much as 30%.The proposed takeover offers a solution to long-standing challenges at both companies. AbbVie gets a set of products big enough to diversify its revenue from Humira, the rheumatoid arthritis injection that is the world’s biggest-selling drug worldwide, with about $20 billion in sales last year. Allergan, which is heavily reliant on the wrinkle reducer Botox, will get a profitable exit for shareholders after a four-year slide.“This is a good alternative for Allergan versus the current share price,” said David Maris, an analyst with Wells Fargo.The expected cost savings from the deal will buy both companies more time but not solve their long-term issues. Both of their blockbuster drugs have begun to face pressure: AbbVie may be nearing the limits of how far it can boost Humira’s price as cheaper competitors come to market, a problem Allergan is already grappling with as more alternatives to Botox emerge.The companies have developed several potentially promising medicines for a range of diseases, though so far none have convinced investors that they can attract the vast pool of patients that take medications like Humira.The drop in North Chicago, Illinois-based AbbVie’s shares Tuesday is a sign that the takeover may not sail through without challenge. Earlier this year, Bristol-Myers Squibb Co. faced opposition from some top investors to abandon its $74 billion acquisition of Celgene Corp. The deal eventually won the backing of a majority of shareholders, but Bristol-Myers shares are still trading well below their pre-deal value.Size ScrutinyOn a conference call announcing the deal, AbbVie Chief Executive Officer Richard Gonzalez, who will lead the combined company, said the transaction should ease concerns about future competition to Humira, adding that the drug is lucrative enough to bankroll the purchase of its eventual successor.“This is a transformation transaction that provides important strategic benefits for both AbbVie and Allergan,” Gonzalez said. “This will have a profound impact on AbbVie’s overall growth story.”Gonzalez said on the call with investors that the transaction “isn’t highly dependent on pipeline.”The deal is evidence that even the world’s biggest drugmakers believe they can get bigger. Along with Bristol-Myers’s deal for Celgene, Japan’s Takeda Pharmaceutical Co. earlier this year completed a $62 billion takeover of Shire Plc. A combined AbbVie and Allergan will have sales of about $48 billion, the companies said in a statement, making it one of the biggest in the industry.The combinations have also begun to attract the notice of antitrust authorities. On Monday, Bristol-Myers said that it had agreed to divest one of Celgene’s top products, the psoriasis pill Otezla, in order to appease regulators at the U.S. Federal Trade Commission. While there are few major areas of overlap between Allergan and AbbVie, the deal is almost certain to get a careful look from regulators.One drug considered to be a contender to replace some of Humira’s sales over the long term is AbbVie’s Skyrizi, a new psoriasis treatment that many patients may find more convenient than Humira, as it needs to be injected less frequently.“Patients love Skyrizi, it’s a big contender,” said Mark Lebwohl, the Waldman Chair of Dermatology at the Icahn School of Medicine at Mount Sinai in New York. “It’s four shots a year and appears to be incredibly effective. AbbVie already knows how to sell this drug.”Back to the U.S.The deal will return Allergan to the U.S., at least for tax purposes. While the company is run from New Jersey, it moved its domicile to Dublin in 2015 via another merger, partly to take advantage of lower corporate rates abroad. The 2017 U.S. tax overhaul cut corporate levies to 21% from 35%, which reduced incentives for companies to relocate overseas.AbbVie currently pays far less in tax than that, however, and has said it will have an effective rate of 9% this year. It has projected its effective rate will rise to 13%.Allergan CEO Brent Saunders had spent months turning over plans for the drugmaker’s future as its stock price dropped from a 2015 peak of almost $340. Those options included selling off the company’s gastrointestinal drugs or women’s health unit, which would have left it more focused on its profitable medical aesthetics line that includes Botox.AbbVie said it expects at least $2 billion in annual pretax synergies and other cost reductions in year three of the deal.Allergan holders will receive 0.8660 AbbVie shares and $120.30 in cash for each share they hold. AbbVie will take on Allergan’s debt, which totaled about $24 billion at the end of the first quarter.Two Allergan directors, including Saunders, will join AbbVie’s board after the purchase is completed, according to the statement. Gonzalez said on the call that he intends to stay with the company at least through Humira’s loss of exclusivity in the U.S.The deal is expected to close in early 2020, the companies said.Morgan Stanley & Co. acted as AbbVie’s financial adviser and Kirkland & Ellis LLP and McCann FitzGerald were legal advisers. JPMorgan Chase & Co. was AbbVie’s financial adviser, and Wachtell, Lipton, Rosen & Katz and Arthur Cox gave legal advice. PJT Partners Inc. was a co-financial adviser to AbbVie. (Updates shares trading in second paragraph.)\--With assistance from Marthe Fourcade, Liana Baker and Cynthia Koons.To contact the reporters on this story: Rebecca Spalding in Boston at email@example.com;Riley Ray Griffin in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: Drew Armstrong at email@example.com, Timothy Annett, Mark SchoifetFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Teva and Mylan stock were both up about 2.5%. Other specialty and generic drugmakers did even better. Mallinckrodt and Bausch Health sported gains of nearly 3% and 6%, respectively.
(Bloomberg) -- AbbVie Inc.’s deal to buy Botox maker Allergan Plc for $63 billion is reviving excitement on Wall Street for makers of specialty and generic drugs, at least for today.For now, investors are shrugging off concerns surrounding the opioid crisis and highly leveraged balance sheets to rush back to drugmakers ranging from flailing Teva Pharmaceutical Industries Ltd. to Endo International Plc in the aftermath of AbbVie’s deal as they position for the next multi-billion dollar deal.Shares of drugmakers jumped early Tuesday, led by a 4.7% advance for Endo and a 3.2% gain for Teva. Peers like Mallinckrodt Plc, Mylan NV, Bausch Health Co, Perrigo Co., and Jazz Pharmaceuticals Plc traded higher as the market saw small losses.The relief rally couldn’t be better timed for an industry that has seen share prices crater to five- to 20-year lows across the board as concerns from opioid liability to sinking generic drug prices and pressures from the White House pushed investors to the exits. But with valuation being the main driver for potential investor interest, Barclays analyst Balaji Prasad advised investors to “resist the temptation” in a note earlier this month.The announcement split Wall Street analysts with Cantor analyst Louise Chen saying the deal brings Perrigo into light as a potential target “given their move toward pureplay consumer and an activist shareholder in the stock.” While Citi’s Andrew Baum disagreed, calling the deal more AbbVie specific “rather than heralding a broader wave of large cap M&A across the sector.”It’s worth noting that the large cap-skewed Nasdaq Biotechnology exchange-traded fund, (IBB), rose 0.9% after the open, while the equal-weighted SPDR S&P Biotech ETF (XBI) gained close to 1% in a sign that investors are expecting a further uptick in deal volume for the blossoming biotech sector. Biogen Inc. -- one of the drugmakers that investors now think may fit the profile of a company looking for a rescue -- outperformed, climbing 4%.(Updates share movement in third paragraph, adds analyst commentary in final paragraph.)To contact the reporter on this story: Bailey Lipschultz in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: Catherine Larkin at email@example.com, Scott SchnipperFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Archer Daniels' (ADM) soft Carbohydrate Solutions segment is concerning. Nevertheless, the company's growth efforts such as the Readiness program are commendable.
(Bloomberg) -- The lifeline thrown to Allergan Plc investors looks like a loss for one investing legend -- and a gain for another.Seth Klarman’s Baupost Group stands to lose about $100 million based on AbbVie Inc.’s offer price for the botox maker. David Tepper’s Appaloosa Management would gain about $87 million, according to regulatory filings.Baupost owned 4.8 million Allergan shares at the end of the first quarter at a cost basis of $208.61, data compiled by Bloomberg show. Under the deal announced Tuesday, investors in the company would get $188.24 a share in cash and stock.Klarman initiated the position by purchasing a $461 million stake in the first quarter of 2016. Back then, Allergan was on the verge of a merger with Pfizer Inc. That deal fell apart and the shares plunged 22% during the final nine months of 2016.Tepper’s Appaloosa held a stake of 3.13 million shares in the first quarter at a cost basis of $160.61 a share.That gain didn’t come easy. Over the last year, Tepper has waged an activist campaign against Allergan, calling for the company’s board to separate the chairman and chief executive officer roles. Tepper has also been critical of the company’s strategy.Representatives for Baupost and Appaloosa weren’t immediately available to comment.To contact the reporter on this story: Brandon Kochkodin in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: Alan Mirabella at email@example.com, Vincent BielskiFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Allergan's (AGN) shares up following a conference call with one of the company's executives, which led an analyst to believe that a split of the company's business is in the cards.
(Bloomberg Opinion) -- When the maker of the top-selling arthritis drug says it’s buying a leader in anti-wrinkle treatments, you’d be forgiven if your initial response to the news was that it seems like a match made in heaven. But take a closer look, and AbbVie Inc.’s $63 billion purchase of Botox maker Allergan Plc isn’t such a perfect fit. AbbVie is desperate for diversification as sales of its $19 billion arthritis blockbuster Humira begin to slow; in Allergan, it has the opportunity acquire a rival at a relative bargain. Even at a 45% premium to Allergan’s closing share price Monday, AbbVie is paying a fraction of what the drugmaker was worth just a couple of years ago, and Botox is still growing.The deal is projected to net big synergies: AbbVie projects cost savings from the combination will plump up its bottom line by $2 billion within three years. But AbbVie's most significant problem isn't the next few years. It's figuring out how to grow when Humira's sales take a real dive starting in 2023. It’s not clear that Allergan will be much help there, and the early reaction from AbbVie shareholders suggests they have doubts:The long-term outlook for Botox is a matter of debate. The toxin, which is used to both smooth wrinkles and treat migraines, has impressive brand recognition and a solid grip on the market. But a cheaper competitor on the market from Evolus Inc. was recently approved, and another from Revance Inc. has produced compelling data and is on the way.On top of that, there’s a new class of preventative migraine drugs on the market, which could pressure Botox’s market share from a different angle. Botox has held up so far. But these pressures are only going to increase over time, and its best days of growth are likely in the past. There’s a decent chance that its sales will flatten just as Humira’s begin to crater when biosimilar copycats hit the U.S. market in 2023.Then there’s the question of what AbbVie gets outside of Botox from Allergan’s pharmaceutical business. The fit is questionable; AbbVie is principally focused on cancer and drugs for inflammatory conditions like arthritis. Allergan doesn’t add anything significant there. So is the quality. Aging products, questionable deals, and research failures have battered Allergan’s stock to the point where investors have been calling for a breakup of the company or a change in management. Allergan has a few growing marketed products, including gastrointestinal drug Linzess and anti-psychotic treatment Vraylar. But there’s little in its late-stage development pipeline to get excited about, especially given its poor recent track record in R&D. Allergan adds little in the way of the research capability required to discover new medicines, and that’s by design. The company has deliberately focused on acquiring assets that others have developed. AbbVie’s acquisition track record since it separated from Abbott Laboratories in 2013 is shaky. Pharmacyclics Inc. netted it half of a good cancer drug at a bruising price, and its $5.8 billion acquisition of Stemcentrx Inc. looks like a complete flop. The company’s biggest deal yet may not improve its reputation.To contact the author of this story: Max Nisen at firstname.lastname@example.orgTo contact the editor responsible for this story: Beth Williams at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Max Nisen is a Bloomberg Opinion columnist covering biotech, pharma and health care. He previously wrote about management and corporate strategy for Quartz and Business Insider.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Allergan shareholders will receive 0.8660 of an AbbVie share and $120.30 in cash, with the transaction expected to complete in early 2020. “We tend to view this transaction as AbbVie specific rather than heralding a broader wave of large-cap M&A across the sector,” said Citigroup. Cantor Fitzgerald said it was “unlikely that anyone else will step in to bid for Allergan at this point”.
US drugmaker AbbVie has agreed to buy Allergan, the Irish-domiciled maker of Botox, in a $63bn deal that is the sector’s latest blockbuster transaction driven by the need to replenish drug pipelines. AbbVie’s investors gave the deal a resounding thumbs down, sending the Chicago-based company’s shares plummeting 15 per cent to $66.38. Allergan’s stock climbed 27 per cent to $163.94.
UnitedHealth Group (UNH) closed at $249.64 in the latest trading session, marking a -1.05% move from the prior day.
Allergan's (AGN) Botox gets FDA approval for the 10th therapeutic indication, upper limb spasticity in pediatric patients, in the age group of 2 to 17 years.
Church & Dwight’s (CHD) earnings have grown at a strong double-digit rate in the past several quarters and have outpaced those of its rivals. The company has surpassed Wall Street’s expectations in five out of the past six quarters.