Botox maker Allergan agreed to pay US$2.48 billion in cash for Zeltiq Aesthetics Inc., a Dublin-based company that sells a system to help people slim down by freezing fat away.
Allergan said it would benefit from the cross-selling opportunities for consumers of Zeltiq’s CoolSculpting System, which uses cooling to kill fat cells, as well as customers of its own facial injectible products, Reuters reports.
“Demand for both procedures is high and this is similar to pouring more gas on the fire,” Allergan chief commercial officer Bill Meury said on a call with investors.
The Botox maker agreed to pay US$56.50 per Zeltiq share, or a premium of 14.4 percent to the company’s Friday close. Zeltiq’s shares rose 12.8 percent to US$55.72 in midday trading on Monday.
Zeltiq’s process was created after two scientists at Harvard University noticed that some children who ate popsicles got dimples in their cheeks, according to Zeltiq’s website.
They discovered that the popsicles were eliminating small pockets of fat cells.
Insurers do not cover Zeltiq’s CoolSculpting System, meaning the bulk of the company’s more than US$350 million in sales last year was paid directly by consumers.
Allergan said it has been targeting “cash-pay” businesses, which is a model it uses for some of its Botox sales and other aesthetic offerings.
CoolSculpting is approved by the US Food and Drug Administration.
Allergan, led by its chief executive Brent Saunders, has struck a number of deals since its US$160 billion merger with Pfizer Inc. collapsed in April.
Those have included its US$2.9 billion purchase of regenerative medicine business LifeCell Corp. and the US$1.5 billion acquisition of biotech company Vitae Pharmaceuticals.
Earlier this month, Saunders set lofty expectations for its injection Kybella – used to diminish fat under the chin, leaving surrounding tissue largely unaffected – for 2017, and expressed an interest in continued deal making.
In the three months ended Dec. 31, total medical aesthetic product sales accounted for 28 percent of Allergan’s net revenue.
Allergan, which estimates that body contouring is a US$4 billion market, said the transaction is expected to close in the second half of 2017.
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