The share price of Ireland-incorporated drugmaker Allergan (NYSE: AGN) closed at $211.61 on Monday, up 3.4% for the day, after the company announced a $2 billion share buyback program and reiterated its pledge to pay down $3.75 billion of debt in 2018.
Allergan affirmed its commitment to increasing its regular quarterly cash dividend annually for shareholders, who had seen the value of their shares decline by around 20% in the last two months.
The planned stock buyback follows Allergan’s completion of a separate $15 billion repurchase, and comes after the company reported mixed trial data for its experimental treatment of nonalcoholic steatohepatitis liver fibrosis.
Brent Saunders, the company’s chief executive and chairman, said: “We continue to believe that Allergan stock is substantially undervalued, and the share price today presents a unique investment opportunity for the company. Our financial strength and cash flow, strong portfolio of products, and diversified pipeline allow us to balance return of capital to shareholders through a flexible share repurchase program and a growing dividend. In its decision, the board is demonstrating its confidence in our future prospects.
“Today’s actions by the board follow our recently completed repurchase of $15 billion of Allergan common stock and strikes the right balance in our desire to return capital to our shareholders while maintaining our focus on investment-grade credit ratings.”
Many of these activities have been overseen by chief financial officer Tessa Hilado, whose decision to retire from Allergan was also announced on Monday. She will remain in the role until a successor is named.
Ms Hilado has been in the role for three years, a period which has also seen Allergan sell off its global generics business to Israel’s Teva Pharmaceutical Industries (NYSE: TEVA), and reduce its levels of debt.
Mr Saunders praised Ms Hilado for leading a successful transformation of Allergan’s finances, and she added: “When I joined Allergan in December 2014, I promised Brent Saunders that I would stay three years to help transform the finance organization, institute better systems and financial controls and improve the balance sheet.
“I am proud of the improvements we have made in each of these areas and the talent that we have attracted to our finance organization over that time.
“Now is a good time to announce my retirement from Allergan so that we have time to identify my successor and orchestrate a smooth hand-off to continue Allergan’s progress.”