Actavis (NYSE:ACT) trumped by $12 billion the hostile takeover bid for Allergan (NYSE:AGN) by Canada’s Valeant Pharmaceuticals (NYSE:VRX, TSE:VRX) and William Ackman’s Pershing Square Capital Management, offering $219 per share for the Botox maker.
Actavis and Allergan said today that they’ve come to terms over the $66 billion deal, consisting of $129.22 in cash and 0.3683 Actavis shares for each AGN share.
"Today’s transaction provides Allergan stockholders with substantial and immediate value, as well as the opportunity to participate in the significant upside potential of the combined company," Allergan chairman & CEO David Pyott said in prepared remarks. "We are combining with a partner that is ideally suited to realize the full potential inherent in our franchise. Together with Actavis, we are poised to extend the Allergan growth story as part of a larger organization with a broad and balanced portfolio, a meaningful commitment to research and development, a strong pipeline and an unwavering focus on exceeding the expectations of patients and the medical specialists who treat them. I am thankful for the hard work and dedication of our employees, and I’m confident they will make many valuable contributions to the combined company. Looking to the immediate future, all of us at Allergan are excited to roll up our sleeves and work closely with the Actavis team to ensure a smooth transition."
The combined companies will have annual pro forma revenues of some $23 billion once the deal is consummated, expected during the 2nd quarter next year, according to a press release.
Valeant said it hasn’t decided how to respond to the deal between Allergan and Actavis.
"We have seen the announcement that Allergan and Actavis have made, and while we will review any such agreement in determining our course of action, Valeant cannot justify to its own shareholders paying a price of $219 or more per share for Allergan," chairman & CEO Michael Pearson said in prepared remarks.
Actavis said the new company will be led by its president & CEO, Brent Saunders; Actavis chairman Paul Bisaro will stay in that role.
"This acquisition creates the fastest-growing and most dynamic-growth pharmaceutical company in global healthcare, making us 1 of the world’s top 10 pharmaceutical companies," Saunders said in a statement. "We will establish an unrivaled foundation for long-term growth, anchored by leading, world-class blockbuster franchises and a premier late-stage pipeline that will accelerate our commitment to build an exceptional, sustainable portfolio. The combined company will have a strong balance sheet, growing product portfolios and broad commercial reach extending across 100 international markets. Our combined experienced management team is dedicated to driving strong organic growth while capturing synergies and maintaining a robust investment in strategically focused R&D."
The new entity ought to generate compound annual organic revenue growth of "at least 10% for the foreseeable future," Saunders said, throwing off more than $8 billion in free cash flow in 2016 and "substantial" growth after that. The deal is expected to bring double-digit growth to adjusted earnings per share "within the 1st 12 months," he said.
News of the deal sent ACT shares up 3.7% to $252.53 apiece as of about 10 a.m. Eastern today. AGN shares were trading at $212.55, up 7.0%.