Actavis buying Warner Chilcott in $8.5B deal

Monday, May 20th, 2013 | Finance News

NEW YORK (AP) — Actavis is buying Warner Chilcott in an all-stock transaction valued at about $8.5 billion which would create the third-biggest specialty pharmaceutical company in the U.S.

The announcement on Monday comes after the two companies said earlier this month that they were in talks about a possible combination. It also follows reports that Parsippany, N.J.-based Actavis rebuffed takeover bids from companies including Mylan Inc. and Canadian drugmaker Valeant Pharmaceuticals International Inc. and that Swiss drugmaker Novartis AG was considering a bid.

Actavis was formed last fall through a $5.6 billion combination of Watson Pharmaceuticals of New Jersey and Actavis of Switzerland. Actavis sells versions of the deep vein thrombosis treatment Lovenox, asthma medication Xopenex, attention deficit hyperactivity disorder drugs Adderall XR and Concerta, and the cholesterol fighter Lipitor, among many other products. It also has a pharmaceutical distribution business called Anda.

With the Warner Chilcott purchase, the new company is expected to be called Actavis PLC and will be incorporated in Ireland, where Warner Chilcott is currently incorporated. It is anticipated to have about $11 billion in combined annual revenue.

Actavis President and CEO Paul Bisaro said in a statement that the acquisition will provide support for the launch of new products over the next several years, specifically in the women's health category. He said these include Minastrin 24 Fe, Esmya, metronidazole vaginal gel 1.5%, the progestin-only contraceptive patch and other women's health products in development through its recent buyout of Uteron Pharma SA.

Bisaro said the Warner Chilcott transaction also gives Actavis a broader portfolio of specialty products that have the potential to be commercialized outside North America.

Warner Chilcott shareholders would own a 23 percent stake in the new company.

Warner Chilcott PLC shareholders will receive 0.160 shares of the new company for each share they own. This equals $20.08 per share, which is a 5 percent premium to Friday's closing price of $19.21. Actavis Inc. shareholders will receive one share of the new company for each share they own at closing.

Both companies' boards unanimously approved the deal, which is expected to close by year's end. It still needs the approval of the majority of shareholders of both companies.

Shares of the new company are expected to trade under the "ACT" ticker symbol on the New York Stock Exchange.

Shares of Actavis climbed $3.20, or 2.6 percent, to $128.70 in Monday premarket trading, while Warner Chilcott's stock gained 64 cents, or 3.3 percent, to $19.85.

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