Allergan profit beats estimates, share buybacks planned
By Amrutha Penumudi and Ransdell Pierson
(Reuters) - Allergan Plc AGN.N, whose $160 billion merger with Pfizer Inc PFE.N collapsed last month, reported a higher-than-expected quarterly profit and said it would buy back up to $10 billion in company stock, helping lift its shares 4 percent.
The Dublin drugmaker on Tuesday said the planned $40 billion sale of its generics business to Teva Pharmaceutical Industries TEVA.TA will close next month and that it will use $8 billion of the money to pay down company debt.
Since the U.S. government torpedoed the merger, a deal that would have relocated Pfizer's legal domicile to Ireland to reduce Pfizer's taxes, investors have speculated Allergan might use the Teva proceeds for sizeable new deals.
However, Allergan Chief Executive Brent Saunders, in a conference call with industry analysts, said he was more interested for now in "stepping stone deals" valued at up to a few billion dollars meant to bolster the company's existing disease areas.
Allergan, known as Actavis Inc until it bought Botox-maker Allergan Inc last year and took on its name, said it expects to buy back $4 billion to $5 billion of its shares over the next four to six months and would consider more stock repurchases if market conditions allow. The company's market value is currently $84.4 billion, according to Thomson Reuters data.
Excluding special items, the company earned $3.04 per share in the first quarter, topping the average analysts' estimate of $3.01 largely because of lower than expected research spending.
Up to Monday's close of $213.71, Allergan's stock had fallen about 23 percent since Pfizer scrapped the merger, which would have been the biggest-ever in the pharmaceutical industry.
The deal collapsed after the U.S. Treasury issued new rules curbing tax inversions, or moves by American companies to relocate their domicile overseas to cut taxes. Continued...