Actavis plc agreed to pay about $66bn (€53bn) for Allergan, a deal that creates a new top 10 drugmaker and ends Valeant Pharmaceuticals International’s attempt at a hostile takeover of the maker of Botox.
Actavis will pay $219 a share in cash and stock for California-based Allergan, the companies said in a statement. The price is 10% above Allergan’s closing level on November 14, and the offer includes a higher percentage of cash than Valeant’s bid.
Valeant won’t try and top Actavis’s offer, the company said yesterday. It had waged a months-long takeover attempt with the backing of Pershing Square Capital Management .
While Valeant was willing to pay over $200 a share, $219 was too much. “Valeant cannot justify to its own shareholders paying a price of $219 or more per share for Allergan,” Valeant chief executive J Michael Pearson said in a statement after the deal’s announcement.
Allergan had described Valeant’s past offers as “grossly inadequate” and argued the Canadian company would gut its research and development budget and use its cash flow to pay down debt accumulated from previous acquisitions.
Allergan was trying to strike a deal before an investor meeting on December 18, people familiar with the matter said last week. That is when shareholders are scheduled to vote on Valeant and Ackman’s proposal to remove Allergan directors, with a plan to eventually replace them with those who are more amenable to Valeant’s offer.
Ackman had called for an auction to sell Allergan at the highest price. It’s not clear if the shareholder meeting will still happen.
Actavis, which makes generic drugs and products like Alzheimer’s treatment Namenda, first approached Allergan about a takeover in August, a person familiar with the matter has said, and talks between the two companies recently restarted. Actavis is run from Parsippany, New Jersey, and incorporated in Dublin.
Ackman acquired about 9.7% of Allergan, mostly in stock options, for about $3.22bn, according to an April 21 regulatory filing. At $215 a share, that stake is worth more than $6bn.
Even as the losing bidder, Valeant will be rewarded: the Canadian company will get 15% of Pershing Square’s net profits should Allergan sell to another company, according to the filing Valeant wanted to buy Allergan to expand its portfolio and become one of the world’s largest drugmakers.