Actavis will offer $129.22 in cash and 0.3683 shares of Actavis for each outstanding share of the botox maker. The bid is higher than the $54 billion bid that Valeant (VRX) made for Allergan earlier in the year.
Allergan resisted the bid from Valeant, but the company's board unanimously approved the offer from Actavis.
"Today's transaction provides Allergan stockholders with substantial and immediate value, as well as the opportunity to participate in the significant upside potential of the combined company," Allergan chairman and CEO David E. I. Pyott said in a statement.
Shares of Actavis were gaining 3.6% to $252.61.
TheStreet Ratings team rates ALLERGAN INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate ALLERGAN INC (AGN) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 8.7%. Since the same quarter one year prior, revenues rose by 16.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The current debt-to-equity ratio, 0.30, is low and is below the industry average, implying that there has been successful management of debt levels. Along with this, the company maintains a quick ratio of 3.29, which clearly demonstrates the ability to cover short-term cash needs.
- Net operating cash flow has slightly increased to $594.50 million or 2.67% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -19.99%.
- The gross profit margin for ALLERGAN INC is currently very high, coming in at 90.62%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 17.19% trails the industry average.
- Compared to its closing price of one year ago, AGN's share price has jumped by 106.97%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- You can view the full analysis from the report here: AGN Ratings Report