Actavis plans to issue $27.5 billion of new debt at an average of 4.25% to fund Allergan merger

By Lisa Kerner

Charlotte, N.C., Nov. 17 – Actavis plc has “secured bridge financing from J.P. Morgan Chase Bank, Mizuho Bank and Wells Fargo” to acquire Allergan, Inc. in a cash and stock deal valued at $66 billion, according to Actavis chief executive officer Brent Saunders.

Permanent financing will “consist of available cash, new debt, including senior unsecured notes, term loans and new equity,” Saunders said during a conference call on Monday to discuss the transaction details.

Actavis plans to issue $27.5 billion of debt at an average of 4.25%, including about $15 billion of short-term bonds of “relatively short duration” such as five years or less.

Under the companies’ definitive agreement, Actavis will acquire Allergan for a combination of $129.22 in cash and 0.3683 Actavis shares for each share of Allergan common stock.

The transaction is valued at $219 per Allergan share based on closing price of Actavis shares on Nov. 14, according to a news release.

Actavis plans to apply its strong cash flow generation to delevering its balancing sheet, with a goal of 3.5 times leverage 12 months post closing.

The company also expects to maintain its investment-grade rating once the transaction is completed, said Saunders.

Closing is slated for the second quarter of 2015.

Pro forma revenue is anticipated to be in excess of $23 billion, with strong free cash flow of more than $8 billion expected in 2016, the release stated.

Actavis is a pharmaceutical company with headquarters in Dublin.

Irvine, Calif.-based Allergan is a multi-specialty health-care company.

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