LONDON, UK / ACCESSWIRE / February 14, 2017 / Active Wall St. blog coverage looks at the headline from Allergan PLC (NYSE: AGN) and ZELTIQ Aesthetics, Inc. (NASDAQ: ZLTQ). Allergan announced on February 13, 2017, that it has agreed to acquire ZELTIQ Aesthetics for $56.50 per share, or a total purchase amount of $2.475 billion, subject to customary adjustments.

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The Agreement

Allergan views this acquisition as a strategic benefit to the Company. Allergan expects the acquisition to boost its facial aesthetics, plastic surgery, and regenerative medicine offerings, and hence, creating a world-class aesthetics business. Allergan plans to bank on ZELTIQ Aesthetics' best-in-class body contouring CoolSculpting system. As per several market research reports, the global market for body contouring grows at a compounded annual growth rate of about 8.61%. According to the ASAPS (British Association of Aesthetic Plastic Surgeons), in 2014 there was an increase of about 273% in the total number of cosmetic procedures for men between 1997 and 2014.

Allergan plans to bank on the newly-opened market opportunities and deliver additional value to its shareholders through inorganic expansion. The Company announced a share repurchase program on November 02, 2016, to buy $10 million of shares and declared a quarterly cash dividend of $0.70 per ordinary share, payable in March 2017. Allergan reported $440.3 million in revenue for Q4 FY16 against $383.6 million for Q4 FY15, for the medical aesthetics segment in the Q4 FY16 report released on February 08, 2017. This acquisition of ZELTIQ Aesthetics will reportedly strengthen its hold on the segment and offer additional growth opportunities to the Company.

The CoolSculpting Procedure

CoolSculpting, a non-surgical clinically proven procedure, from the house of ZELTIQ Aesthetics uses the selective process to reduce unwanted fat employing a patented cooling technology. CoolSculpting works through gently targeting fat cells in the body, to induce a natural, yet controlled elimination of fat cells, while not altering the surrounding tissues. The Company has reported millions of CoolSculpting treatments through more than 5,700 CoolSculpting systems in about 80 countries.

The CoolSculpting System is FDA-cleared to affect appearance through lipolysis or reduction of unwanted fat using a patented cooling technology. CoolSculpting works by gently cooling targeted fat cells in the body to induce a natural, controlled elimination of fat cells without affecting surrounding tissue. As per the official press release Body contouring is a $4 billion market opportunity worldwide and growing.

ZELTIQ Aesthetics pitches itself as the leader of the body contouring segment owing to more than 3.5 million treatments performed to date. The CoolSculpting system is FDA approved and is viewed as the primary selling point for ZELTIQ Aesthetics.

Allergan's Inorganic Growth Strategy

Allergan, in the recent years, has been on a steak with mergers and acquisitions. After its reported $160 billion failed merger with Pfizer in April 2016, owing to new tax inversion regulations from the US Treasury, the Company has aimed at movement through smaller acquisitions. The Company acquired Lifecell's regenerative medicine unit for $2.9 billion on February 01, 2017. The agreement was accretive to Allergan's aesthetic and regenerative medicine business in plastic surgery. This acquisition of ZELTIQ Aesthetics is viewed as a definitive growth strategy and the deal is expected to close by Q2 FY17.

Stock Performance

At the closing bell, on Monday, February 13, 2017, Allergan's stock marginally rose 0.16%, ending the trading session at $246.76. A total volume of 3.02 million shares were traded at the end of the day. In the last month and previous three months, shares of the Company have rallied 14.11% and 14.03%, respectively. Moreover, the stock surged 17.50% since the start of the year. Currently, the stock has a market cap of $96.90 billion and a dividend yield of 1.13%.

ZELTIQ Aesthetics' stock closed Monday's trading session at $55.93, surging 13.22% from its previous closing price of $49.40. A total volume of 23.09 million shares have exchanged hands, which was higher than the 3-month average volume of 710.71 thousand shares. The Company's stock price surged 34.22% in the last month, 41.31% in the past three months, and 47.81% in the previous six months. At Monday's closing price, the stock's net capitalization stands at $2.22 billion as per the closing price on February 13, 2016.

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SOURCE: Active Wall Street