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Actavis Saves Allergan from Valeant Hostile Takeover with $66 Billion Deal, But Will Slash R&D

Valeant chief executive Michael Pearson

The seven-month battle over American Botox haven pharmaceutical company Allergan is over, after it accepted a friendly takeover bid from Irish integrated specialty pharmaceutical Actavis.

The Actavis offer of combined cash and shares values Allergan at $66 billion, way higher than what Valeant Pharmaceuticals was bidding—$53 billion.

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The Jew in the story is, of course, is Bill Ackman, who, after an intense and acrimonious, months long battle for a hostile takeover of Allergan, in which he owns a 9.7% stake, finally gave up his battle to convene a special shareholders’ meeting on December 18th.

Valeant chief executive Michael Pearson has also given up his hostile takeover attempt, releasing a statement saying “Valeant cannot justify to its own shareholders paying a price of $219 or more per share for Allergan.”

Allergan’s statements about the Actavis deal stress the potential for increasing sales, as both companies are forecasting the third highest growth rate for the pharmaceutical industry from 2015–2018.

Actavis chief executive Brent Saunders basically declared a euphoric “We drug the world!” although, as he put it, the message went: “We expect to deliver [our synergies] in an intelligent way, which is not sacrificing future growth.”

According to Chemistry World (how appropriate), Valeant, whose share value has grown 14-fold since 2008 through a series of acquisitions, was planning to slash Allergan’s R&D budget by more than two thirds.

If it ain’t broke, right?

Actavis will also cut costs, don’t kid yourselves, dropping research that isn’t “high value, high probability of success.”

However, it does not anticipate any site closures.

Good to know, as the holiday season is upon us…

“Valeant wanted to cut $900 million of R&D, whereas we’re cutting $400 million from a much larger spend, ” Saunders said during a conference call for financial analysts.

But he’s also slashing research down to $1.7 billion.

Allergan chief executive David Pyott welcomed this smaller knife cut into the raw flesh, calling it “a meaningful commitment to research and development.” He added: “Anybody can cut costs. The real goal here is to be very smart and thoughtful in driving these efficiencies without impairing our ability to grow.”

Should we start an office pool on plant closings, or have you put one up already?



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