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Will the AbbVie deal still happen?

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anonymous said:
With the recent turmoil, that will possibly continue for many many months, some are wondering is this deal will still happen. What do you guys think?
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If the deal does not happen valuations of both companies go down by 50% atleast. Would you as a shareholder and / or C level executive want that?

Only reason deal won't happen is if some material misstatements emerge but since due diligence has been done a while ago, deal will happen
 




anonymous said:
If the deal does not happen valuations of both companies go down by 50% atleast. Would you as a shareholder and / or C level executive want that?

Only reason deal won't happen is if some material misstatements emerge but since due diligence has been done a while ago, deal will happen
Click to expand...


Dan Shoham has a good post on the deal. Consent Decree nearly guarantees the deal will close. All what you can do is be mentally ready for whatever outcome
 








Could not send the link, but here is Dan’s post

—————————————————-

Hey, the deal was that if Vicky reaches 1000 followers for her instagram blog by New Year, I'd spend half a day writing a post. Between when I posted this deal (12/23) and New Year, her follower count went up by only a handful (from just under 900 to just over 900). So, no going around saying I broke the deal! She is now a bit over 1600, but not on the strength of my shameless promotion...

That said, I'm always happy, when asked, to add a few words.

FTC: Yes, the FTC has pretty much approved the deal. There are other regulators involved, but the FTC was the big one. If they really want to close the deal now, not much stands in the way. (Except for the overall shutdown of just about everything due to COVID-19)

Consent Decree: That's the regulators equivalent of an out-of-court settlement. Regulator says "I'm concerned about X, Y, and Z". Applicant says "If I did A, B, C; will that address your concern?". {some negotiations}. Both sides sign a deal where applicants agrees to take some specified actions and regulator agrees that those actions are sufficient to address their concerns. Regulators prefer CD over just denying an application (and then, likely, having to defend that denial in court when the applicant appeals), and applicants prefer the certainty of a CD over taking the confrontational approach with its long delays.

COVID-19: That's been scrambling everything, so no prediction here (personally, if I may venture a bit of a political editorial, I feel that, at this point, the mitigation is more damaging than the threat; and there is a competition between media-facing experts, politicians, and talking head about who can propose the most economically destructive ideas so they can show "courage" and "leadership" -- the curve is already too flat, further flattening is counterproductive).

Stock Market: The one thing that could permanently blow this deal to pieces is if share prices were to diverge or decline to a point where the $120 cash component would no longer make sense (so far, the share price of the two companies, even with the overall market volatility, is not very far from where it was when the deal was signed). As long-time readers of this thread may remember, at the time of the Teva deal, I was concerned that Teva would pull out because the overall pharma market declined a lot between when the deal was signed and when it was to close (my comments were that Teva should bail, but won't. In actuality, Teva didn't pull out, the deal closed, Allergan made out like bandits, and we now know that Teva almost went bankrupt when the added revenues couldn't support the added debt). At this point, I still don't think that AbbVie should pull out, but with further stock market declines (or, with the blizzard of new decrees, some major governmental intervention to the detriment of the long-term health of the industry), I may change my mind. If it was an all-stock deal, no problem -- both stocks would just move in tandem (so Allergan shareholders trade their less valuable AGN shares for equally less valuable ABBV shares). However, with a huge portion of the deal in cash, ABBV would be giving a lot of cash for a company that is worth less than before.

Dan.

PS, with continue shameless promotion of Vicky's blog, here is the link: https://www.instagram.com/vicky_vega_phd/
 




anonymous said:
Can you share the link?[/





Hey, the deal was that if Vicky reaches 1000 followers for her instagram blog by New Year, I'd spend half a day writing a post. Between when I posted this deal (12/23) and New Year, her follower count went up by only a handful (from just under 900 to just over 900). So, no going around saying I broke the deal! She is now a bit over 1600, but not on the strength of my shameless promotion...

That said, I'm always happy, when asked, to add a few words.

FTC: Yes, the FTC has pretty much approved the deal. There are other regulators involved, but the FTC was the big one. If they really want to close the deal now, not much stands in the way. (Except for the overall shutdown of just about everything due to COVID-19)

Consent Decree: That's the regulators equivalent of an out-of-court settlement. Regulator says "I'm concerned about X, Y, and Z". Applicant says "If I did A, B, C; will that address your concern?". {some negotiations}. Both sides sign a deal where applicants agrees to take some specified actions and regulator agrees that those actions are sufficient to address their concerns. Regulators prefer CD over just denying an application (and then, likely, having to defend that denial in court when the applicant appeals), and applicants prefer the certainty of a CD over taking the confrontational approach with its long delays.

COVID-19: That's been scrambling everything, so no prediction here (personally, if I may venture a bit of a political editorial, I feel that, at this point, the mitigation is more damaging than the threat; and there is a competition between media-facing experts, politicians, and talking head about who can propose the most economically destructive ideas so they can show "courage" and "leadership" -- the curve is already too flat, further flattening is counterproductive).

Stock Market: The one thing that could permanently blow this deal to pieces is if share prices were to diverge or decline to a point where the $120 cash component would no longer make sense (so far, the share price of the two companies, even with the overall market volatility, is not very far from where it was when the deal was signed). As long-time readers of this thread may remember, at the time of the Teva deal, I was concerned that Teva would pull out because the overall pharma market declined a lot between when the deal was signed and when it was to close (my comments were that Teva should bail, but won't. In actuality, Teva didn't pull out, the deal closed, Allergan made out like bandits, and we now know that Teva almost went bankrupt when the added revenues couldn't support the added debt). At this point, I still don't think that AbbVie should pull out, but with further stock market declines (or, with the blizzard of new decrees, some major governmental intervention to the detriment of the long-term health of the industry), I may change my mind. If it was an all-stock deal, no problem -- both stocks would just move in tandem (so Allergan shareholders trade their less valuable AGN shares for equally less valuable ABBV shares). However, with a huge portion of the deal in cash, ABBV would be giving a lot of cash for a company that is worth less than before.

Dan.

PS, with continue shameless promotion of Vicky's blog, here is the link: https://www.instagram.com/vicky_vega_phd/
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