It has not even been noticed here in Malta, but last week the news was all the rage on the world news wires: US biotech Allergan, the Botox-maker, last week accepted a 'white knight' takeover bid from Actavis. The Irish-headquartered firm's cash-and-shares offer values Allergan at $66 billion, eclipsing rival suitor Valeant Pharmaceuticals' $53 billion bid. The Valeant's chief executive, Michael Pearson, appears to have conceded its hostile takeover attempt is over. 'Valeant cannot justify to its own shareholders paying a price of $219 or more per share for Allergan,' he said in a statement.
The deal is the fourth biggest in pharmaceutical merger and acquisitions history, and the largest in the decade since Sanofi's $73.5 billion acquisition of Aventis in 2004. But it is the latest in a string of purchases for Actavis, including the $25 billion takeover of Forest Labs announced in February that shifted it from solely generic drug manufacturing. By adding its current market valuation to the price it's paying for Allergan, Actavis says the deal will make it the sixth largest pharma firm, above GSK.
When Paul Bisaro, executive chairman of Actavis, raised the idea of buying Allergan this summer, he prompted some surprise from his company's board. "The ink was barely dry on Forest," recalls one director.
Mr Bisaro, 53, became chief executive of what was then Watson Pharmaceuticals in 2007, when it was a run-of-the-mill generic drugs group with a market capitalisation of not much more than $3.7bn.
There was no grand plan to catapult the company into the top tier of pharma companies. Colleagues and associates describe Mr Bisaro as an opportunistic chief who became gradually more confident as the deals got bigger. "I was in the right place at the right time," he says.
"I could never have predicted we would be able to acquire Forest or Allergan. It's like getting Boardwalk and Park Place on the Monopoly board - with hotels."
Buying Allergan is a chunky bite for Actavis, whose $64 billion market value is barely bigger than its target's.
Actavis, as well as Valeant, was an early adopter of the so-called inversion deal strategy that has boomed in popularity, in which a US company pursues an overseas merger to capture a lower foreign tax rate and other overseas tax perks. Once based in Parsippany, N.J., Actavis inverted to Ireland when it bought Warner Chilcott last year. Analysts have predicted that a combination with Actavis could shave hundreds of millions of dollars next year from the tax bill of Allergan, which is based in Irvine, Calif.
A merger of the two could remake the drug industry, creating a pharmaceutical company selling brand-name and generic drugs for stomach, eye, skin and other conditions. Allergan, as said, is best known for its sales of wrinkle treatment Botox. Actavis's top-selling drug is Alzheimer's treatment Namenda. A combined company would ring up about $23 billion a year in sales, putting it around the top 10 of pharmaceutical companies by revenue.
A deal between Actavis and Allergan would be the largest in a robust year for corporate matchmaking. Other blockbuster deals in the works this year-such as Pfizer's attempted $120 billion takeover of AstraZeneca PLC and AbbVie Inc. 's $54 billion proposed acquisition of Shire PLC-have collapsed.
This is no doubt a very welcome news, not just for those employed by Actavis but also for Malta where Actavis has been happily located over the past years. It is always good to be associated with a world-beater.