Actavis Purchase Of Allergan Makes It A “$100 Billion Merger Monday”

This may not quite be the blow-off top in the merger bubble as companies rush to frontrun the ECB and buy whatever still isn’t nailed, but it is getting close. Because while earlier today Baker Hughes announced it would accept the Halliburton offer to buy it unchallenged in a $35 billion transaction leading many to wonder just how much lower the price of oil is still set to drop, moments ago the Allergan “White Knight” swooped from up on high, and as had also been leaked in recent weeks, Actavis agreed to buy the botox- maker which Ackman and Valeant had been so eagerly chasing for months in order to let the roll-up pharma pad its non-GAAP books with another 2-3 years of pro forma “synergies” add backs.

The details as reported: Actavis will acquire Allergan for a combination of $129.22 in cash and 0.3683 Actavis shares for each share of Allergan common stock. Based on the closing price of Actavis shares on November 14, 2014, the transaction is valued at approximately $66 billion, or $219 per Allergan share.

This means that between Halliburton and Actavis, today we have had the first $100 billion “Merger Monday” in over a decade.

Some other observations:

“Projected Synergies of at Least $1.8 Billion while Maintaining R&D Commitment of Approximately $1.7 Billion”

Translation: some $1.8 billion worth of soon to be former Allergan (and Actavis) employees will soon find out just how “strong” the US labor market truly is.

More from the overly-optimistic expectations:

Free Cash Flow Generation of more than $8 Billion expected in 2016

Investment Grade Rating Expected to be Maintained; Rapid Deleveraging to Below 3.5x Debt to Adjusted EBITDA within 12 Months

Double-Digit Accretion to Non-GAAP EPS within First 12 Months

That’s all great, as to what Allergan was going to do standalone in 2015, consensus had its EBITDA at $3.8 billion. This means that excluding largely meaningless synergy expectations, which never materialize anyway, Actavis paid roughly 17.4x forward Allergan multiple…

Nope, no M&A, or botox, bubble at all.

The full statement:

Actavis to Acquire Allergan to Create Top 10 Global Growth Pharmaceutical Company with $23 Billion in Revenue

Transaction Valued at $66 Billion or $219 per Share in Cash and Actavis Shares –

Fastest Growing, Most Dynamic Pharmaceutical Company in Global Healthcare –

Leading Blockbuster Franchises in Ophthalmology, Neurosciences/CNS, Medical Aesthetics/Dermatology/Plastic Surgery, Women’s Health, Gastroenterology and Urology –

Positioned for Long-Term Double-Digit Organic Revenue and Earnings Growth –

Double-Digit Accretion to Non-GAAP EPS within First 12 Months –

Expands International Presence with Greater Market and Product Reach –

Projected Synergies of at Least $1.8 Billion while Maintaining R&D Commitment of Approximately $1.7 Billion –

Free Cash Flow Generation of more than $8 Billion expected in 2016 –

Investment Grade Rating Expected to be Maintained; Rapid Deleveraging to Below 3.5x Debt to Adjusted EBITDA within 12 Months –

Closing Anticipated in Q2 2015 –