Allergen will pay $350 million in an up-front payment for the business.

The deal
allows for an additional contingency payment of $25 million depending on certain
sales targets

SkinMedica's primary prescription drug is Vaniqa cream, a US approved drug for

reducing unwanted facial hair for women.

CEO and Chairman David E.I. Pyott commented on the deal, "Allergen is widely
recognized for our leadership in the facial aesthetics area. The acquisition of
SkinMedica will nicely complement our existing facial aesthetics business, which
includes product such as BOTOX Cosmetics, JUVEDERM and LATISSE. Most
importantly, the acquisition will allow us to expand our product portfolio to better
meet the needs of our existing base of physician customers and their patents."

For the first nine months of 2012, Allergen generated $4.3 billion in revenues. The
company net earned $774.6 million, or $2.52 per diluted share. For the full year,
Allergen guides for sales of $5.7 billion on which the company guides for non-GAAP
earnings of $4.17-$4.19 per share. GAAP earnings could come in around $1 billion
with earning per share coming in around $3 per share.

llergen ended the third quarter of its fiscal 2012 with $2.9 billion in cash,
equivalents and short term investments. The company operates with $1.5 billion in
short and long term debt, for a net cash position of $1.4 billion. Financing of the
SkinMedica deal should therefore not result in any problems.

The market values Allergen at $26.7 billion at the moment, which implies a
valuation of operating assets at $25.3 billion. Based on 2012s annual
outlook, this values the firm's operating assets at 4.4 times annual revenues
and roughly 25 times annual earnings.

Allergen currently pays a quarterly dividend of $0.05 per share, for an

annual dividend yield of just 0.2%.

Shares have more than doubled from lows of $35 in 2008 to all time highs of
$95 earlier this year. The success of Botox boosted annual revenues from
$4.3 billion in 2008 to an estimated $5.7 billion in 2012. Net income almost
doubled from $563 million to an estimated $1 billion over the time period.

The deal of SkinMedica is rather small for Allergen. The initial acquisition
sum represents just 1.3% of Allergen's market capitalization. Analyzing the
deal gets rather complicated given the lack of financial details regarding the
transaction.
I remain on the sidelines despite the popularity of Botox. The impact of the
deal will be limited. I think Allergen's valuation is a bit rich, amidst the low
dividend payout and high earnings multiple, despite the continued growth
potential and strong balance sheet.

Allergan shares rose 1 percent to $88.84 in morning trading on the New York
Stock Exhhange, amid slight declines for the broad stock market.