By Jonathan D. Rockoff
Actavis PLC said Monday that it would pay $66 billion in cash
and stock for Allergan Inc. in a deal that appears to have thwarted
a hostile takeover of the Botox maker.
Under the terms, Actavis would pay a total of $219 a share with
nearly 60% of the deal in cash and the rest in stock, Actavis said.
The combined company is expected to have a roughly 15% tax rate,
according to Actavis's planned presentation on the deal that was
reviewed by The Wall Street Journal.
The companies appear to have shielded Allergan from a hostile
takeover by Valeant Pharmaceuticals International Inc., which had
bid $53 billion for Allergan but has indicated it may raise its
offer.
Valeant CEO Michael Pearson said the company will review
Actavis's offer but indicated the price was now too steep for a
counteroffer.
"Valeant cannot justify to its own shareholders paying a price
of $219 or more per share for Allergan," Mr. Pearson said. "We will
remain focused on delivering strong organic results and evaluating
acquisition opportunities as we always have: prudently, in a
disciplined manner, and in the best interests of our
shareholders."
Shares of Actavis rose 3% to $251, while Allergan shares
increased 6.7% to $211.90.
If Actavis loses Allergan to another company, Actavis would
receive a breakup fee "typical" of the industry, a person familiar
with the matter said. Actavis Chief Executive Brent Saunders is
expected to discuss the fee during a conference call about the
deal, the person said.
The boards of Dublin-based Actavis and Allergan, of Irvine,
Calif., have blessed the deal, the person said.
A combination would produce at least $1.8 billion in synergies,
while keeping about $1.7 billion Allergan's research-and
development spending. Actavis said the deal to add to earnings by a
double-digit percentage within the first 12 months.
Since April, Allergan has been trying to fend off Valeant, which
teamed up with activist investor William Ackman and his hedge fund
Pershing Square Capital Management LP to buy Allergan.
Allergan, a maker of Botox and other antiwrinkle drugs, is an
attractive target because it is the leading player in a $5 billion
world-wide cosmetic-medicine market that industry officials believe
is ripe for significant growth.
Under CEO David Pyott, Allergan sales have often risen 10% or
more year over year, more than many pharmaceutical companies.
A combination with Actavis, led by Mr. Saunders and Executive
Chairman Paul Bisaro, would make for one of the world's biggest
pharmaceutical companies, selling eye, skin and stomach drugs with
$23 billion in yearly sales.
David Benoit contributed to this article.
Write to Jonathan D. Rockoff at Jonathan.Rockoff@wsj.com
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