With The Teva Money, Allergan Could Engage In 'Large M&A' Next: Evercore ISI

In a report published Monday, Evercore ISI analyst Umer Raffat said that with its capital structure being “reloaded” following the deal with Teva Pharmaceutical Industries Ltd (ADR) TEVA, global pharma giant Allergan PLC AGN is now set to “further accelerate” its strong growth profile.

The Teva deal added about $36 billion to Allergan’s capital structure. Since Allergan is committed to investment grade credit rating, it is likely to keep a portion of the proceeds to pay down debt, analyst Umer Raffat said.

Raffat believes that Allergan would also deploy capital to build on its “proven track record of creating shareholder value” by:

• Adding scale in existing therapeutic areas
• Expanding into new therapeutic areas and geographies
• Undertaking “transformational” M&A activities

Answering a question regarding the kind of deals Allergen would be interested in, CEO Brent Saunders stated that it all boils down to strategic fit and price, while adding that they were “tracking companies from both categories.”

In the report Evercore ISI noted their buyside survey showed the “top takeout targets” as Biogen Inc BIIB, AbbVie Inc ABBV, BioMarin Pharmaceutical Inc. BMRN and a combination with Pfizer Inc. PFE.

Investors seemed to want to know whether Allergen would go for a large deal before the Teva generics deal closes in 1Q15. Saunders responded by saying that it would depend on the “structure of deal.”