MD+DI Online is part of the Informa Markets Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Allergan to Sell for $66B in Biggest M&A Deal of 2014

Irvine, CA-based Allergan has been adamant in fighting off a hostile takeover attempt from Valeant Pharmaceuticals International for the past seven months. But Allergan has apparently struck a deal with another pharmaceutical firm--Actavis (Dublin, Ireland)--which is prepared to pay $219 per share, or $66 billion for Allergan, which makes everything from tissue expanders and silicone breast implants to Botox.

The deal helped propel the Dow and S&P 500 to record highs on November 8 and contributed to a 2.1% increase in the Nasdaq biotech index. 

The offer from Actavis would be the biggest deal of the year, eclipsing Medtronic's $43 billion offer for Covidien in the medical device sector as well as Comcast's $45 billion purchase of Time Warner Cable and AT&T's $48.5 billion acquisition of DirecTV. The merger would also put Actavis into the list of top 10 pharmaceutical companies based on sales. After the acquisition, Allergan would have $23 billion in revenue according to a press release. "[The merger with Allergan] doubles the revenue generated by our brands business and doubles the international revenue of the combined company," said Brent Saunders, CEO and president of Actavis, in a statement.

The deal received unanimous support from the boards of directors of both companies.

The hedge fund manager William Ackman, instrumental in orchestrating the previous hostile takeover attempt of Allergan, also expressed his support for the deal. Holding nearly 10% of Allergan's stock, Ackman would stand to gain $2.3 billion from the deal. 

The deal is an example of a shrewd "Heads I Win, Tails You Lose" strategy on the part of Ackman, says Business Insider, noting how he offered to help Valeant Pharmaceuticals (Laval, QC, Canada) finance the acquisition of Allergan while buying up a tidy sum of the company's stock. This nearly guaranteed that he would profit no matter what happens. As Business Insider explains: 

"He helps Valeant approach its target. The target resists. Valeant ups its bid. The target resists more, and it finds another company to buy it. The new company makes an offer. Ackman, who has invested in the target, makes money either way."

Refresh your mobile health knowledge at BIOMEDevice San Jose, December 3-4, 2014.

Brian Buntz is the editor-in-chief of MPMN and Qmed. Follow him on Twitter at @brian_buntz

Like what you're reading? Subscribe to our daily e-newsletter.

Hide comments
account-default-image

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish