Megamergers are reshaping the drug industry, and now AbbVie—which inked a massive Allergan buyout earlier this year—is set to embark on a hefty bond offering as it seeks to close its deal, Bloomberg reports.
The company plans to issue $28 billion in bonds, possibly by Tuesday, a source told the news service. AbbVie and Allergan anticipate closing their deal in early 2020. The offering would rank fourth among the largest in history, Bloomberg reported.
AbbVie and Allergan in June inked their $63 billion buyout, a deal that will create the fourth-largest drugmaker in the world. For AbbVie, the buyout helps shore up its post-Humira future after biosims start taking a toll on the megablockbuster’s U.S. sales.
And AbbVie CEO Richard Gonzalez says he's not worried about handling the debt load. The two companies together churned out $19 billion in cash last year.
"Combined, we will generate significant earnings and cash flow to enhance our innovative R&D platform support a strong and growing dividend and rapidly pay down debt," he said during the company's third-quarter earnings call.
AbbVie has some history with large bond issues. In 2012, the company wasn't yet independent when it raised $14.7 billion to spin out of Abbott. In its investor presentation on the Allergan buy, AbbVie said it plans to reduce debt by $15 billion to $18 billion by 2021 with further payoffs through 2023.
The news comes after Bristol-Myers Squibb issued $19 billion in bonds earlier this year to help cover its massive Celgene buyout. That deal hasn’t yet closed, but BMS execs said they’ll quickly work to pay down debt after the deal closes.
AbbVie’s big buy is only the latest example of industry giants tying up to create megacompanies. Aside from BMS’ Celgene buyout, Takeda in January closed its Shire deal, catapulting into the top 10 drugmakers worldwide.