AbbVie To Buy Botox-Maker Allergan, Look Ahead To G-20

Tuesday, June 25, 2019

For the second consecutive day, we see another major acquisition during the pre-market period. Yesterday was the Gaming industry’s buyout of Caesars Entertainment (NASDAQ:CZR) by Eldorado Resorts (NASDAQ:ERI) , and today we turn to biopharma: AbbVie (NYSE:ABBV) has agreed to purchase Botox maker Allergan (NYSE:AGN) for roughly $63 billion in cash and stock.

The deal reportedly values Allergan at a 45% premium to Monday’s closing price. Thus far, since the deal has been announced, shares of Allergan have blossomed 32%. AbbVie, on a quest to replace coming lost revenues on Humira’s generic competition, have dipped around 7.5% thus far ahead of the opening bell.

Allergan has been a targeted acquisition for the past several years — back in 2015, Pfizer (NYSE:PFE) , which recently acquired Array Biopharma (NASDAQ:ARRY) , was prepared to pay almost double this morning’s headline price for Allergan. AbbVie, which spun off from Abbott Labs (NYSE:ABT) 6 years ago, had been rated a Zacks Rank #2 (Buy) ahead of the announced transaction; Allergan was carrying a Zacks Rank #3 (Hold).

Trump-Xi to Meet This Weekend

As the leaders of the world’s top economies join together for the G-20 summit in Osaka, Japan at the end of this week, President Trump and Xi have scheduled a separate, private meeting between the embattled two leaders. The ongoing trade war, having been put into effect as of fall last year, has shown little progress over the last month, when talks nearing a deal fell apart.

U.S. Commerce Secretary Wilbur Ross does not want investors to get their hopes up that a trade deal is coming soon, certainly not as a direct result of this Saturday’s scheduled meeting between Trump and Xi. What investors might more reasonably expect in the near term is a pause in tariffs and a resuming of talks between the two sides over the summer.

At the G-20 summit last year in Argentina, Trump and Xi also met privately. Routinely, reports from inside these private talks are very positive, but now a year on with no trade agreement in sight, investors have understandably tempered their expectations.

Mark Vickery
Senior Editor

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