Allergan - MAP Acquisition Update

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Allergan, Inc. (AGN) recently announced that the tender offer to purchase the shares of MAP Pharmaceuticals, Inc. (:MAPP) and withdrawal rights have expired on Feb 28, 2013. We note that Allergan had commenced the cash tender offer to buy MAP Pharma shares for $25.00 on Jan 31, 2013. At the end of the offer period approximately 75.1% of the MAP Pharma shares were tendered.

We note that on Jan 22, 2013, Allergan announced its intention to acquire MAP Pharma. The offer price represented a premium of 60% over MAP Pharmaceuticals’ closing price on that date. The deal is expected to be worth approximately $958 million.

The acquisition will give Allergan the exclusive rights to migraine candidate, Levadex, in the US. Levadex is currently under regulatory review for the treatment of adults suffering from acute migraine. A response from the US Food and Drug Administration (:FDA) should be out by Apr 15, 2013.

The acquisition is expected to close towards the end of the first quarter or in the second quarter of 2013. After the completion of the transaction, MAP Pharmaceutical will become a wholly owned subsidiary of Allergan.

Our Take

We are positive on Allergan’s decision to buy MAP Pharmaceuticals. Levadex’ approval would be a major boost for Allergan and will complement the company’s portfolio, which includes Botox (onabotulinumtoxinA). Botox is indicated for several indications including the treatment of chronic migraine headache.

We remind investors that in Jan 2013, the FDA approved Botox for the treatment of patients suffering from overactive bladder (:OAB) with symptoms of urge urinary incontinence, urgency and frequency.

Allergan carries a Zacks Rank #3 (Hold). Right now, Eli Lilly and Company (LLY) and Shire plc (SHPG) look more attractive in the pharma space with a Zacks Rank #2 (Buy).

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