AbbVie To Acquire Cancer Biotech Pharmacyclics In $21 Bln Cash, Stock Deal

(RTTNews) - Research-based biopharmaceutical company AbbVie Inc. (ABBV) and Pharmacyclics Inc. (PCYC) announced a definitive agreement for AbbVie to acquire Pharmacyclics, and its flagship asset Imbruvica (ibrutinib), a treatment for hematologic malignancies. The cash and stock deal values Pharmacyclics at about $21 billion. The company expects the transaction to be highly accretive to both revenue and earnings by 2017.

The acquisition enhances AbbVie's clinical and commercial presence in oncology, strengthening its robust pipeline. It will also establish the company's strong leadership position in hematological oncology which has a market approaching $24 billion globally.

Under the terms of the transaction, AbbVie will pay $261.25 per share comprised of a mix of cash and AbbVie equity. The transaction was approved by the Boards of Directors of both companies.

AbbVie will acquire all outstanding shares of common stock of Pharmacyclics through a tender offer, followed by a second-step merger. Pharmacyclics' stockholders will be allowed to elect cash, AbbVie common stock or a combination, subject to proration.

The aggregate consideration will consist of about 58 percent cash and 42 percent AbbVie common stock. The closing of the tender offer is expected in mid-2015.

AbbVie will acquire all remaining shares of Pharmacyclics' common stock that are not tendered in the tender offer through a second-step merger, which will be completed immediately after the tender offer and without a vote of Pharmacyclics' stockholders.

The company expects to fund the transaction through a combination of existing cash, new debt and stock.

Imbruvica is a Bruton's tyrosine kinase inhibitor approved for use in four indications to treat three types of blood cancers including chronic lymphocytic leukemia, mantle cell lymphoma and Waldenstrom's macroglobulinemia.

It received initial U.S. Food and Drug Administration approval in 2013 and is the only therapy to have received three Breakthrough Therapy designations by the FDA. It is currently approved in more than 40 countries.

AbbVie said there are significant opportunities with further Imbruvica indications, including solid tumors. There is also the potential to leverage AbbVie's immunology expertise for the development of Pharmacyclics' immunology program, and advance AbbVie's efforts in hematologic malignancies.

Richard Gonzalez, chairman and CEO, said, "The acquisition of Pharmacyclics is a strategically compelling opportunity...Its flagship product, Imbruvica, is not only complementary to AbbVie's oncology pipeline, it has demonstrated strong clinical efficacy across a broad range of hematologic malignancies and raised the standard of care for patients."

ABBV, which closed up 1.1 percent on Wednesday, lost 2 percent in pre-market activity.

PCYC settled up 6.3 percent at $230.48, and gained nearly 9 percent in pre-market activity.