Allergan Plc, the maker of wrinkle treatment Botox, agreed to buy Kythera Biopharmaceuticals Inc. for about $2.1 billion to add treatments for double chins and male pattern baldness.
The cash and stock transaction values Kythera at $75 a share, the companies said Wednesday in a statement. That’s about 24 percent above Kythera’s stock price at the close of trading on Tuesday in New York.
Kythera makes an injection that is the only approved non-surgical treatment for a double chin. That therapy was approved in the U.S. in April. Allergan will also gain an experimental product for male pattern baldness, and other treatments in early-stage development, according to the statement.
“Leveraging our leadership position will allow this product to grow faster and ultimately be bigger than if Kythera were to do it alone,” Allergan Chief Executive Officer Brent Saunders said Wednesday on a conference call.
Kythera shareholders will get 80 percent of the purchase price in cash, and 20 percent in new Allergan shares, the companies said. The deal must be approved by Kythera shareholders. Allergan reaffirmed its earnings forecast for 2015 and said the acquisition won’t affect earnings in 2016 and then add profit after that.
The structure of the transaction leaves flexibility for Allergan to do additional deals later this year, Saunders said.
Allergan, which until this week was called Actavis, has grown into the fifth-biggest pharmaceutical company in the U.S. by market value through a series of acquisitions. The company plans to keep its generics business even after investment bankers suggested spinning off or selling the division, Saunders said this week in an interview.
Kythera CEO Keith Leonard could get at least $12.3 million in equity and severance if he’s terminated after the deal or resigns after a reduction in responsibilities.
Allergan rose less than 1 percent to $299.36 at 10:44 a.m. in New York. Kythera, based in Westlake Village, California, climbed 22 percent to $74.28.