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Is the Allergan-Zeltiq Deal Smooth Sailing?

Dublin-based Botox maker, Allergan has announced they’re acquiring Zeltiq, a medical technology company responsible for Coolsculpting, a U.S. Food and Drug Administration-approved procedure that eliminates fat through a cooling system. Although Allergan is vying for Zeltiq’s unique fat-freezing technology, the deal scheduled to close later in 2017 is already experiencing hiccups.

In the $2.48 billion acquisition, Allergan has agreed to pay Zeltiq $56.50 per share, which is a 14 percent premium to Zeltiq’s $49.40 closing rates. The body contouring industry is estimated to be worth $4 billion.

CoolSculpting works by targeting common fat areas like the stomach, chin, and thighs. The fat cells are frozen, and over the course of a few weeks, the extra weight eventually disappears. Allergan is no stranger to the body contour market, as they already own Kybella, a deoxycholic acid injection that reduces fat under the chin.

The acquisition comes nearly a year after Pfizer and Allergan’s failed $160 billion deal. The merger between the two biopharmaceutical companies saw its swift demise after the U.S. Treasury Department changed inversion rules so that U.S. companies were prohibited from taking advantage of other countries’ tax breaks. In the end, Pfizer paid Allergen $150 million for canceling the deal.  

The Allergan-Zeltiq merger might be facing similar hurdles. Earlier in March, Zeltiq was faced with an investor class action lawsuit for neglecting to present information about their financial projections and specifics about Zeltiq’s management practices. According to the plaintiff, Michael Kreindler, the omission violates Section 14(a) of the Exchange Act.

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