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UPDATE 1

Actavis to acquire Forest labs in $25bn takeover

By Dan Stanton+

18-Feb-2014
Last updated on 18-Feb-2014 at 17:28 GMT

Actavis has confirmed it will acquire Forest Laboratories in a deal worth up to $25bn (€18bn) following rumours last night.

The rumour mill was spinning yesterday with media reports that generics firm Actavis was in talks to acquire New York New York-headquartered drugmaker Forest. The Wall Street Journal  said people close to the matter predicted a deal may come "as early as Tuesday" and, sure enough, Actavis has announced this morning it has come to an agreement with Forest, and will acquire the firm for a combination of cash and equity valued at approximately $25bn. In a company statement, Actavis estimates a combined revenue of over $15bn for 2015.

"With this strategic combination, we create an innovative new model in specialty pharmaceuticals leadership, with size and scale, 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," said Paul Bisaro, current CEO of Actavis who will head up the new combined company.

"Bolstered by one of the deepest and most diversified product portfolios in the industry with an exceptionally strong pipeline, this transaction creates a powerful engine for generating long-term, double-digit revenue and earnings growth."

Forest CEO brent Saunders added: "Forest is a great fit with Actavis due to our strong legacy in branded specialty and primary care pharmaceuticals with a best in class commercial team, a top-notch drug development organization and a long history of successful partnerships."

The acquisition comes just months after Actavis expanded its branded drug business by completing an $8.5bn takeover of Warner Chilcott . According to the firm, that acquisition more than doubled Actavis – one of the world’s largest generic firms - specialty brands portfolio.

The addition of Forest adds a number of products to bolster Actavis’ generics business further, in therapeutic areas that include cardiovascular, CNS, anti-infective, endocrinology, gastrointestinal obstetrics and pain management.

Forest itself has recently spent $2.9bn cash on specialty Gastrointestinal and Cystic Fibrosis company, Aptalis. That deal – which would also add Aptalis’ third party delivery technology provider and drug manufacturer business to Forest – was announced in January and Forest is currently awaiting review by anti-trust authorities in the US and Canada.

According to Forest, the firm and its subsidiaries have 13 locations in the US, one in Canada and four sites in Europe. According to its 2012 annual report, the net value of its property, plant and equipment assets came to $360m.

As for Actavis, the firm has been reshuffling its manufacturing capacity of late, selling off its stake in the joint venture with China-based firm Foshan to local company Zhejiang Chiral Medicines Chemical Company.

Furthermore, last month the firm sold off its loss making European generics operations to Indian firm Aurobindo for $41m . Aurobindo said in a statement with the Bombay Stock Exchange it was confident it could turn the fortune of the facilities – located in France, Italy, Spain, Portugal, Belgium, Germany and the Netherlands – around.

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