AbbVie’s Acquisition of Allergan Creates Transformative Pharmaceutical Powerhouse

AbbVie booth at the 2019 annual meeting of the American Society of Clinical Oncology (ASCO) held June 1 - 4, 2019 in Chicago, Ill.
AbbVie booth at the 2019 annual meeting of the American Society of Clinical Oncology (ASCO) held June 1 - 4, 2019 in Chicago, Ill.

AbbVie, a global biopharmaceutical company based in Chicago, Ill, USA, and Allergan, headquartered in Dublin, Ireland, confirmed that the companies have entered into a definitive transaction agreement under which AbbVie will acquire Allergan.

The cash and stock transaction for a transaction equity value of approximately US $ 63 billion re based on the closing price of AbbVie’s common stock of US $ 78.45 on June 24, 2019.

Richard A. Gonzales will remain AbbVie's chairman and chief executive officer, while two members of Allergan’s Board, including chairman and chief executive officer, Brent Saunders, will join the new, combined company's board.
Richard A. Gonzales will remain AbbVie’s chairman and chief executive officer, while two members of Allergan’s Board, including chairman and chief executive officer, Brent Saunders, will join the new, combined company’s board.

“This is a transformational transaction for both companies and achieves unique and complementary strategic objectives,” explained 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,” Gonzalez added.

“This acquisition creates compelling value for Allergan’s stakeholders, including our customers, patients and shareholders. With 2019 annual combined revenue of approximately US $ 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,” observed 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.”

New growth platforms
The acquisition is expected to diversify and expand revenue base for the combined companies which will consist of several attractive franchises with leadership positions across immunology, hematologic oncology, medical aesthetics, neuroscience, women’s health, eye care and virology.

Brent Saunders, will join the new, combined AbbVie – Allergan board.

Allergan’s product portfolio is expected to be enhanced by AbbVie’s commercial strength, expertise and international infrastructure.

Immediate scale and enhanced profitability
AbbVie’s enhanced growth platform, which includes 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 US $ 30 billion in 2020.

Financially attractive
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%.1 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 US $ 19 billion in operating cash flow in 2018

Richard A. Gonzales will remain AbbVie’s chairman and chief executive officer, while two members of Allergan’s Board, including chairman and chief executive officer, Brent Saunders, will join the new, combined company’s board.

The management teams of both companies anticipate closing of the transaction by early 2020, subject to regulatory and Allergan’s shareholder approvals.

Reference
AbbVie Infographic, June 25, 2019 [Infographic]