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AbbVie Scores US Antitrust Approval for $63B Allergan Deal

AbbVie’s (ABBV) plan to close the $63 billion Allergan (AGN) deal this month appears on track following the announcement that they have received US Federal Trade Commission (FTC) clearance for the deal.

The acceptance of the proposed consent order by the FTC satisfies all the required antitrust clearances needed for AbbVie to buy Allergan.

As part of the proposed consent, Allergan has agreed to divest brazikumab, an investigational IL-23 inhibitor in development for autoimmune diseases, to AstraZeneca (AZN).

Plus it will sell Zenpep, a treatment for exocrine pancreatic insufficiency due to cystic fibrosis and other conditions, to Nestle. Nestle will also acquire Viokace, another pancreatic enzyme preparation, as part of the same transaction.

Additionally, AbbVie and Allergan have amended the Transaction Agreement to allow only one Allergan Director will join the AbbVie board following close. Allergan’s current Chairman and CEO Brent Saunders will not join the AbbVie Board in order to pursue other opportunities, the press release revealed.

Going forward, the acquisition is still subject to other customary closing conditions and Irish High Court approval- with a hearing scheduled for today May 6.

Mizuho Securities’ Vamil Divan gives the deal his seal of approval. A key concern surrounding the Allergan deal has been whether the FTC might require AbbVie to divest its key growth driver Skyrizi, says Divan. “This investor concern should finally be allayed, as the FTC appears satisfied with the divestiture of Allergan’s brazikumab (IL-23) back to AstraZeneca instead” the analyst wrote.

He continues to see AbbVie as a ‘top large-cap pick’ and believes the Allergan deal changes the AbbVie story for the better. “It brings in additional growth drivers at an attractive price, including products early in their life cycle (e.g. Vraylar, Ubrelvy) and others that should be highly durable (e.g. Botox, Juvederm), as well as >$2Bn in expense synergies” Divan told investors on May 5.

Indeed, the stock boasts a firmly bullish Strong Buy Street consensus with an average analyst price target of $100 (17% upside potential). That falls just under Divan’s own price target of $101. (See AbbVie stock analysis on TipRanks)

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