With new cash on its way, it's back to buying for deal-happy Allergan, CEO says

Allergan CEO Brent Saunders

On Monday, Allergan ($AGN) agreed to sell off a $40.5 billion piece of its business, inking a pact to exit the generics space with a sale to Teva Pharmaceutical Industries ($TEVA). But CEO Brent Saunders is already thinking about future buys.

Allergan will use some of the $36 billion in net cash it picks up from the Israeli pharma to pare down the debt it took on to buy Allergan back when it was Actavis, he told the Financial Times. And once that's out of the way, the avid dealmaker can pick right back up where it left off--with more "transformational" buys.

"We're going to contemplate transformational deals--that's what's new today. We couldn't before because of our capital structure and debt, but now we can," he told the newspaper.

Saunders has plenty of experience in that department. He helped the company orchestrate its last two game-changing deals--once as the CEO of Forest Labs, which sold itself to Actavis in early 2014, and later as the Actavis chief that swooped in as a white knight to steal Allergan away from hostile suitor Valeant ($VRX). Both of those tie-ups added heft on the branded side, and now that generics are out of the picture, Allergan can focus on more branded buys.

So what companies might Allergan be eyeing up next? Industry watchers have pegged Biogen ($BIIB), AbbVie ($ABBV) and Amgen ($AMGN) as potential targets, and Saunders told the FT "it's possible" that he would spring for companies involved in the kind of early-stage drug discovery his pharma has largely eschewed. And as RBC Capital Markets analyst Michael Yee pointed out in an investor note seen by Barron's, Amgen already boasts a biosimilar joint venture with Allergan's Watson.

"It would be a shock if Amgen was acquired by a spec pharma player … but rationale and logistics are theoretically possible on paper," he wrote.

One thing's for certain, Saunders promised: He won't be making any moves to try to entice deal-hungry Pfizer ($PFE)--which has been tossed around as a potential Allergan buyer--into making an offer.

"I spend zero time thinking about Pfizer and I am not doing anything to make us more or less attractive to them," he said.

- read the FT interview (sub. req.)
- get more from Barron's

Special Reports: Top 10 generics makers by 2012 revenue - Teva - Actavis | Pharma's top 10 M&A deals of 2014 - Actavis/Allergan - Actavis/Forest Laboratories | The 25 most influential people in biopharma in 2015 - Brent Saunders - Actavis

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