Drugmaker AbbVie Inc said on Tuesday it would buy Botox-maker Allergan Plc for about USD 63 billion, grabbing control of by far the biggest name in medical aesthetics to help reduce its reliance on blockbuster arthritis treatment Humira.
AbbVie has been under pressure to diversify its portfolio as Humira, the world's best-selling drug, faces competition from cheaper versions in Europe.
Allergan Chief Executive Officer Brent Saunders put together the current version of the company through a series of deals to roll up several pharmaceutical firms in 2014, and has run the company since then.
He built his reputation as a dealmaker, but his company has struggled since Pfizer Inc walked away from a USD 160 billion deal to buy Allergan in 2016. Allergan's shares have lost around half their value since then.
Saunders has been under pressure over the last year to break up the company, with activist investor David Tepper running a campaign to urge Allergan to hire an independent chairman.
Allergan shareholders will receive 0.8660 AbbVie shares and USD 120.30 in cash for each share held, for a total consideration of USD 188.24 per Allergan share, a premium of 45 per cent to the stock's Monday close.
AbbVie shares were trading down 10.5 per cent at USD 70.50, while Allergan shares were up nearly 28.4 per cent in early trading.
Maxim Jacobs, director of research for North America at Edison Investment Research, said the deal provides AbbVie with a set of assets to help diversify away from Humira at a very reasonable price.
"In return, Allergan shareholders get a decent premium to what has been an outrageously low stock price," Jacobs said.
AbbVie will continue to be incorporated in Delaware as AbbVie Inc and will be led by Richard Gonzalez as chairman and chief executive officer.
Saunders and another member of Ireland-based Allergan's board will join AbbVie's board upon completion of the transaction.
The deal is expected to add 10 per cent to adjusted earnings per share over the first full year following the close, the companies said.