Botox maker Allergan Inc. agreed to be acquired by Irish company Actavis for about $66 billion, apparently thwarting a hostile takeover attempt from a Canadian pharmaceutical firm.
The cash-and-stock sale would end decades of local ownership of Allergan, which was founded in 1950 – long before Irvine became a city.
Actavis agreed to pay significantly more than the roughly $54 billion that Valeant Pharmaceuticals International Inc. had offered – a deal that Allergan’s board swiftly rejected.
In a statement, Valeant said it would not likely continue its fight to acquire the Botox company.
“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,” J. Michael Pearson, Valeant’s chairman and chief executive, said in a statement.
Allergan Chief Executive David E.I. Pyott said the deal, approved by the boards of both companies, “provides Allergan stockholders with substantial and immediate value, as well as the opportunity to participate in the significant upside potential of the combined company.”
Investors cheered Monday’s deal, driving up Allergan shares more than 5% to an all-time high of $209.20.
Allergan employees were also optimistic about the deal. While the merger will lead to job cuts, the downsizing is expected to be far less than Valeant had planned. Actavis said it would retain a significant presence in Irvine.
“It's a better feeling with Actavis,” said an Allergan research-and-development employee, who asked not to be identified because he was not authorized by the company to speak to the media. “We all know Valeant's model was to come in and remove everything. We prefer the white knight [Actavis].”
Brent Saunders, chief executive of Actavis, said the acquisition will immediately make Actavis “one of the world’s top 10 pharmaceutical companies.”
“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,” Saunders said in a statement.
Allergan was founded in 1950 and originally focused on eye-care products before acquiring the rights to wrinkle-erasing Botox, its top-selling product.
The company has employees spread around the world, including at a newly opened facility in New Jersey.
About 2,300 of Allergan's 11,000-plus worldwide employees are based at the company's headquarters.
In addition to Botox, which generated nearly $2 billion in sales last year, Allergan sells ophthalmic medications, including Restasis, the only prescription drug approved to treat chronic dry eye. That drug produced nearly $1 billion in sales last year.
All told, Allergan reported revenue of more than $6 billion in 2013, a figure that's expected to grow this year.