Actavis to buy Botox-maker Allergan for $66 billion

New York (AFP) - Actavis Monday announced plans to acquire Botox-maker Allergan for $66 billion, creating a global pharmaceutical behemoth and likely ending the aggressive pursuit of Allergan by Canada's Valeant Pharmaceuticals International.

The combination creates a heavyweight in opthalmology, neurosciences and medical aesthetics that will be among the 10 biggest global pharmaceutical companies by sales, according to a joint Actavis-Allergan statement.

Valeant, which had joined hands with New York activist shareholder William Ackman in chasing Allergan, said it would not match Actavis's offer.

"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," said Valeant chief executive Michael Pearson.

The price settled Monday is a huge increase from the $46 billion that Valeant initially offered Allergan in April.

Valeant subsequently raised the offer two times, and three weeks ago suggested it was ready to pay $60 billion, or "at least $200 a share".

But Allergan's board never showed interest in selling to the Canadian company, repeatedly refusing to meet to discuss a deal. In September news reports said Allergan was in talks with Actavis, finally confirmed at the beginning of this month.

Even so, the rich premium paid by Actavis will mean a hefty payday for the thwarted acquirers, especially Ackman, Allergan's largest shareholder with nearly 10 percent of outstanding stock.

Shares of Allergan have soared to about $213 from $116.63 on April 10, before Ackman revealed his huge stake. On paper Ackman now has a profit of $2.6 billion, with about 15 percent of that going to Valeant, according to Dow Jones Newswires.

Ackman declined comment Monday.

Actavis and Allergan said the deal would result in $1.8 billion in annual cost savings, improved marketing success by combining sales forces and expanded reach into key growth markets in Asia and Latin America.

-High-margin beauty treatments-

Initially known as a big generics producer, Actavis has grown rapidly through acquisition, including a 2012 deal in which US-based Watson Pharmaceuticals bought Swiss-based Actavis, shifted the headquarters to Switzerland and took the name of the acquired company.

In 2013, Actavis relocated again, this time to Ireland after buying specialty pharmaceutical company Warner Chilcott. In both cases, Actavis cited financial benefits from shifting to a lower-tax jurisdiction.

The US Treasury Department in September enacted rules to discourage "inversion" deals to merge with foreign companies to achieve lower taxes overseas.

But Actavis, having already moved, will pay taxes of about 15 percent compared with the US tax rate of more than 35 percent, said Jeff Loo, an analyst at S&P Capital IQ.

The Allergan purchase moves Actavis into the higher-margin business of branded products compared with generics, Loo said.

It buys control of Allergen?s hit Botox treatment, popular globally to mask the effects of aging, as well as other looks-enhancing treatments like breast implants and facial fillers, and medical treatments to fight skin afflictions like acne.

Sales of Botox were almost one-third of Allergan's sales last year of nearly $2 billion.

"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," said Brent Saunders, chief executive of Actavis.

Monday's transaction is subject to shareholder votes by both Actavis and Allergan. Allergan shareholders were scheduled to vote December 18 on a Valeant proposal to replace the Allergan board.

The companies expect the deal to close in the second quarter of 2015.

The deal is the largest pharmaceutical transaction of the year and takes the total in global health care transactions to a record $383.4 billion, according to Dealogic.

In midday trade, Allergan shares jumped 5.4 percent to $209.35, Actavis rose 1.9 percent to $248.32 and Valeant advanced 0.8 percent to $135.35.