Allergan share price up 26% after AbbVie's $63 billion buyout
The Botox maker's stock soars after being purchased by AbbVie.
Allergan share price surged after AbbVie bought the company in a $63 billion cash-and-stock deal. The merger is the latest large pharmaceutical deal in 2019.
AbbVie/Allergan merger details
AbbVie sells Humira, the best-selling drug used to treat autoimmune illnesses. Allergan produces Botox, the injection that reduces wrinkles. AbbVie is buying Allergan to diversify its portfolio after the US patent for Humira expires in 2023. Allergan is trying to reverse the slide of its stock after generic versions of some of the company's medications became available. AbbVie shareholders will own 83% of the new company and Allergan stockholders will have 17%.
AbbVie comments on merger with Allergan
AbbVie chief executive officer (CEO), Richard Gonzalez, said that the AbbVie/Allergan merger will create an opportunity for both companies to improve their profits.
‘This is a transformation transaction that provides important strategic benefits for both AbbVie and Allergan. This will have a profound impact on AbbVie’s overall growth story,’ said Gonzalez.
Gonzalez also said that purchasing Allergan for $63 billion will diversify AbbVie’s portfolio.
‘It really serves a purpose to eliminate any reliance on Humira,’ said Gonzalez.
What do financial experts say about the AbbVie/Allergan merger?
Marc Goodman, senior research analyst at investment bank SVB Leerink, said that the deal will help Allergan find stability after a volatile time when stockholders wanted sweeping changes.
‘It looks as though the Allergen shareholders will finally be rewarded for their patience,’ said Goodman.
Erik Gordon, a University of Michigan business professor, believes that after major pharmaceutical mergers like Pfizer buying Array BioPharma, Allergan and AbbVie may raise drug prices and cut back on research and development.
‘When drug companies merge, the first place they look for cost savings is in research and development because it is expensive and the payoffs are uncertain,’ said Gordon.
The merger is expected to be completed in early 2020.
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. Please see important Research Disclaimer.
Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.
Seize a share opportunity today
Go long or short on thousands of international stocks.
- Increase your market exposure with leverage
- Get spreads from just 0.1% on major global shares
- Trade CFDs straight into order books with direct market access
Live prices on most popular markets
- Forex
- Shares
- Indices
See more forex live prices
See more shares live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
See more indices live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.
