Amgen has agreed to buy Horizon Therapeutics in a deal valued at $27.8 billion. The Thousand Oak, California-based biopharmaceutical company announced on Monday that it will pay $116.50 in cash for each share of Horizon.
Based in Dublin, Horizon develops potential treatments for rare, autoimmune, and inflammatory diseases. Horizon manufactures Tepezza, a thyroid eye disease treatment that generated more than $1 billion in its first full year on the market. The drug’s sales reached $1.67 billion last year.
In a press release announcing the deal, Amgen Chairman and CEO Robert A. Bradway called the acquisition of Horizon “a compelling opportunity for Amgen and one that is consistent with our strategy of delivering long-term growth by providing innovative medicines that address the needs of patients who suffer from serious diseases,” and that it “will drive growth in Amgen’s revenue and non-GAAP EPS and is expected to be accretive from 2024.”
The deal follows Amgen closing its $3.7 billion acquisition of ChemoCentryx in October.
Amgen announced that management expects the combined firms to generate “robust free cash flow” of roughly $10 billion over the 12 months through Q3 2022. This free cash flow should “enable de-levering following Completion, while continuing to support investment in the Combined Group’s pipeline and commercial brands,” according to the release.
Free cash flow is the cash left over after a company has paid expenses, interest, taxes, and long-term investments. It is used to buy back stocks, pay dividends, or participate in mergers and acquisitions. AmGen is one of the holdings in the FCF US Quality ETF (TTAC ), which identifies companies with strong and sustainable profitability that provide core equity exposure with lower downside capture.
The fund aims to outperform the Russell 3000 through a fundamentals-driven investment process that selects an average of 144 stocks based on free cash flow strength. Its holdings are then weighted by a modified market-cap log transformation, allowing increased exposure to companies with the strongest proprietary free cash flow rankings.
TTAC’s portfolio will also be rated with an ESG score, excluding companies with low ESG ratings. Firms with an extreme rise in shares count and increase in leverage are excluded.
FCF Advisors specializes in free cash flow investment strategies, primarily through its Free Cash Flow Quality Model. They have been focused on this factor since 2011 and are specialized in multi-factor fundamental analysis grounded in decades of research.
“Free cash flow is so important right now, given that the allocation environment has gotten exponentially more difficult in 2022,” said Bob Shea, CEO and CIO of FCF Advisors. “Cohorts have never seen an environment like this. In a difficult environment, people want to make sure they understand what they own.”