The Burrill Report


Actavis, the world’s third-largest generic pharmaceutical company, has reached a deal to buy Forest Laboratories for $25 billion in cash and stock, bolstering its geographic reach and expanding its portfolio of generic and over-the-counter pharmaceuticals.

If successfully completed, it will create a company that anticipates combined annual revenues of more $15 billion in 2015, as much as $1 billion in operating and tax savings. The offer represents a premium of 25 percent per share over Forest’s $71.39 on the last trading day before the deal was announced.

The combination will create a "balanced offering of strong brands and generics, a focus on strategic, lower-risk drug development, and—most important—the ability to drive sustainable organic growth,” says Paul Bisaro, chairman and CEO of Actavis.

The companies expect to realize saving of as much as $1 billion in operating and tax synergies, before any manufacturing synergies or revenue synergies, while continuing to invest over $1 billion per year in R&D.

“By joining forces with Actavis, we become more relevant to key physicians and customers," says Brent Saunders, CEO and president of Forest.

The combined company will have an approximately $2 billion CNS franchise, gastroenterology and women’s health franchises valued at approximately $1 billion each, a cardiovascular franchise that generates approximately $500 million per year; and urology and dermatology franchises approaching $500 million a year in sales each.

The current-day Actavis is a product of consolidation. It was created when Watson Pharmaceuticals paid $5.6 billion (€4.3 billion) to acquire the Actavis Group in April 2012. In May 2013, Actavis went on to buy the specialty pharmaceutical company Warner Chilcott for about $5 billion in Actavis stock and the assumption of long-term debt. That deal allowed the Actavis to gain new tax advantages of being domiciled in Ireland while also broadening its reach into new markets outside the United States, making 2013 the company’s most successful year ever, according to Bisaro.

In buying Forest, Actavis also picks up assets Forest purchased in January, when it bought Aptalis, a specialty pharma focused on gastrointestinal illness and cystic fibrosis owned by the private equity firm TPG Capital, for $2.9 billion in cash.

The buyout, if completed, would be one of the five biggest pharma deals of the past decade.

February 23, 2014
http://www.burrillreport.com/article-actavis_to_buy_forest_labs_for_25_billion.html