U.S. pharmaceutical giant AbbVie (ABBV) has unveiled a $10.6 billion deal to acquire biotech company Apogee Therapeutics, a transaction expected to close in the third quarter. To fund the purchase, AbbVie will take on $8 billion in new debt. At a time when that debt load is raising eyebrows, the company is simultaneously promising shareholders that its dividend won’t shrink — a contrast that has quickly drawn the market’s attention.
The concerns are not unfounded. On the company’s second-quarter earnings call, Chief Financial Officer Scott Reents disclosed that the acquisition will dilute annual adjusted earnings per share by $0.14, narrowing the previous guidance of $13.91 to $14.11 down to a range of $13.87 to $14.07. At the same time, the additional debt is expected to generate roughly $2.9 billion in annual interest expenses. Management was also clear that the deal is not projected to boost adjusted EPS until 2032, implying a payoff timeline that stretches well beyond six years.
Yet AbbVie never intended to touch its dividend. The company has raised its quarterly payout by 5.5% to $1.73 per share, extending a 53-year streak of consecutive annual dividend increases that dates back to its days under Abbott Laboratories. Since being spun off in 2013, AbbVie has grown its cumulative dividend by more than 330%, and the stock now yields about 2.8%, comfortably above the market average. With debt-servicing costs climbing and near-term earnings taking a hit, the company’s determination to hold the dividend steady rests on several layers of support.
The first line of defense is a solid financial foundation. Although acquisition-related charges have pushed the payout ratio above 100%, that metric carries little meaning during this transitional period. A more instructive measure is actual cash generation. Over the past four quarters, AbbVie produced $18.2 billion in free cash flow while spending roughly $12 billion on dividends — a coverage cushion that remains more than adequate. The most recent quarterly results further underscore this strength: revenue came in at $16.9 billion, up 10.2% from a year earlier, while earnings per share of $2.03 represented a 290% surge compared with the same period last year. Robust cash flow and double-digit revenue growth supply the buffer needed to absorb higher interest costs and still honor the dividend commitment.
A second pillar of confidence lies in AbbVie’s well-demonstrated ability to integrate large acquisitions. This is not the first time the company has leaned heavily on debt to execute a strategic deal. In 2020, it spent $63 billion to buy Allergan, bringing in a portfolio of aesthetics and neuroscience products and creating the financial runway to advance immunology drugs Skyrizi and Rinvoq. Those two therapies have since filled the revenue gap left by Humira, the former world’s best-selling drug, after its patents expired. Then, in 2024, AbbVie struck a $10.1 billion deal for ImmunoGen, gaining the ovarian cancer treatment Elahere. In the latest quarter, Elahere generated $211 million in sales, a 33% year-over-year increase. This track record shows a company capable of cultivating new blockbusters through acquisitions and covering short-term debt pressures with long-term growth.
The drug at the center of this latest acquisition represents a potential future payoff. Apogee’s lead asset is Zumilokibart, a monoclonal antibody targeting interleukin-13. It is being developed primarily for atopic dermatitis, with plans to expand into asthma and eosinophilic esophagitis. Current biologic therapies typically require injections every two to three weeks, a regimen that weighs on patient adherence and convenience. Zumilokibart’s dosing interval of three to six months could meaningfully improve the treatment experience. The atopic dermatitis market, with tens of millions of patients worldwide, remains deeply underpenetrated. By way of comparison, the same-class drug Dupixent recorded global sales of €15.7 billion (approximately $18 billion) in 2025. If Zumilokibart captures a significant share on the strength of its dosing advantage, reaching blockbuster status is far from a fantasy — and that potential is the fundamental reason AbbVie is willing to absorb near-term dilution and wait six years for a return.
Between shareholder rewards and financial discipline, the company has also drawn a clear boundary. AbbVie has publicly stated its intention to maintain its A2/A- credit ratings and to reduce its net leverage ratio back to roughly two times within two to three years after the deal closes. That signals management is not leveraging up recklessly but making a carefully calibrated bet grounded in cash flow, earnings growth and a measured debt-repayment schedule.
A combination of healthy free cash flow, a repeated pattern of successful “debt-funded acquisition, integration and new blockbuster creation,” and a differentiated pipeline drug aimed at a massive unmet need gives AbbVie the confidence to take on more debt while keeping its dividend intact. For investors focused on long-term returns, a deal that looks contradictory at first glance may in fact be the company’s next critical move for a new growth cycle.
