Are Allergan Shareholders Getting Enough in the AbbVie Acquisition?

Health and Healthcare

Published: June 25, 2019 11:45 am

Last Updated: March 13, 2020 4:33 pm

Allergan PLC (NYSE: AGN) shares jumped on Tuesday after the company announced that it would be acquired by AbbVie Inc. (NYSE: ABBV) in a cash and stock transaction. The transaction is valued at roughly $63 billion, based on AbbVie’s most recent closing price of $78.45.

Under the terms of the transaction agreement, Allergan shareholders will receive 0.8660 AbbVie shares and $120.30 in cash for each Allergan share that they hold, for a total consideration of $188.24 per Allergan share.

Based on Allergan’s closing price on Monday ($129.57), the transaction price implies a premium of about 45%.

It is expected that, immediately after the closing of the acquisition, AbbVie shareholders will own roughly 83% of AbbVie on a fully diluted basis and the Allergan shareholders will own about 17% of AbbVie on a fully diluted basis.

Looking ahead, AbbVie is expected to generate significant annual operating cash flow, which will support a debt reduction target of $15 billion to $18 billion before the end of 2021, while also enabling a continued commitment to Baa2/BBB or better credit rating and continued dividend growth.

Richard A. Gonzalez, board chair and chief executive of AbbVie, commented:

This is a transformational transaction for both companies and achieves unique and complementary strategic objectives,” “The combination of AbbVie and Allergan increases our ability to continue to deliver on our mission to patients and shareholders. With our enhanced growth platform to fuel industry-leading growth, this strategy allows us to diversify AbbVie’s business while sustaining our focus on innovative science and the advancement of our industry-leading pipeline well into the future.

Shares of AbbVie traded down about 15% at $66.90 apiece on Tuesday, in a 52-week range of $66.00 to $100.23. The consensus price target is $90.07.

Allergan was up nearly 27% at $164.27 per share, with a 52-week range of $114.27 to $197.00.

ALSO READ: Jefferies Top Growth Stocks to Buy All Have Big-Time Catalysts

Are You Still Paying With a Debit Card?

The average American spends $17,274 on debit cards a year, and it’s a HUGE mistake. First, debit cards don’t have the same fraud protections as credit cards. Once your money is gone, it’s gone. But more importantly you can actually get something back from this spending every time you swipe.

Issuers are handing out wild bonuses right now. With some you can earn up to 5% back on every purchase. That’s like getting a 5% discount on everything you buy!

Our top pick is kind of hard to imagine. Not only does it pay up to 5% back, it also includes a $200 cash back reward in the first six months, a 0% intro APR, and…. $0 annual fee. It’s quite literally free money for any one that uses a card regularly. Click here to learn more!

Flywheel Publishing has partnered with CardRatings to provide coverage of credit card products. Flywheel Publishing and CardRatings may receive a commission from card issuers.