Strategy

Allergan Buys CoolSculpting Company for $2.4B

The acquisition of Zeltiq Aesthetics' system for using cooling to eliminate fat cells gives Allergan access to the growing body-contouring market.
Matthew HellerFebruary 13, 2017

Allergan is adding a non-surgical fat reduction procedure to its portfolio of body-changing products by acquiring Zeltiq Aesthetics for $2.48 billion.

Zeltiq’s CoolSculpting system uses cooling to eliminate fat cells, without affecting surrounding tissue. Allergan said the body-contouring market is worth $4 billion and Zeltiq is “highly complementary” to its facial aesthetics, plastic surgery and regenerative medicine businesses.

The all-cash deal prices Zeltiq at $56.50 per share, or a premium of 14.4% to the Friday close. In trading Monday, the stock was up 12.8%, at $55.73.

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“With CoolSculpting, our offerings to plastic surgeons, dermatologists and aesthetic practitioners will now extend to three of the largest and fastest-growing segments of their practices, putting Allergan in a unique position to provide expanded customer service, and help meet the needs of patients,” Allergan CEO Brent Saunders said in a news release.

The deal continues a spurt of acquisitions by Allergan since its $160 billion merger with Pfizer collapsed in April. It purchased regenerative medicine business LifeCell Corp. for $2.9 billion and biotech company Vitae Pharmaceuticals for $1.5 billion.

In Allergan’s last quarter, sales of medical aesthetic products including Botox accounted for 28% of its net revenue.

CoolSculpting is based on the scientific principle that fat cells are more sensitive to cold than the overlying skin and surrounding tissues. As Reuters reports, insurers do not cover the procedure, meaning the bulk of Zeltiq’s more than $350 million in 2016 sales was paid directly by consumers.

“Allergan’s world-class medical aesthetics products, global footprint, history and commitment to developing best-in-class aesthetic treatments makes the company ideally suited to realize the maximum commercial potential of the Zeltiq controlled-cooling technology platform,” Zeltiq CEO Mark Foley said.

Analyst Jonathan Block of the investment firm Stifel Financial Corp. said the deal would enable Allergan to sell multiple procedures to individual patients.

“The cross-selling opportunity between CoolSculpting and injectables could increase with a bundled sales approach,” he wrote in a client note.