Irish pharmaceutical company Actavis PLC plans to buy Forest Laboratories Inc. in a deal valued at approximately $25 billion US that will increase its presence in the U.S. and build its portfolio of branded drugs.
Actavis will add the Alzheimer's disease treatment Namenda, and newer drugs like the antidepressant Viibryd to its product portfolio with the latest in a string of multi-billion dollar acquisitions that have swelled its size in recent years.
Analysts say the acquisition also gives Actavis more negotiating muscle with hospitals and other care providers that also have grown bigger in recent years.
Actavis said Tuesday it will pay Forest shareholders $26.04 in cash and a portion of an Actavis share for each Forest share. The total, per-share price of $89.48 represents a premium of about 25 per cent over Forest's closing price Friday of $71.39.
Traders speculate on better offer
Shares of New York-based Forest soared nearly 30 per cent to $92.50 in Tuesday morning trading. That's well above the price Actavis offered, a sign that shareholders believe Forest will receive a better offer. U.S.-traded shares of Dublin-based Actavis climbed 7.6 per cent, or $14.56, to $206.04.
Actavis was formed in 2012 through a $5.6 billion tie-up between generic drugmaker Watson Pharmaceuticals and Actavis Group. It has grown rapidly through acquisitions, including an $8.5 billion deal it closed last fall to buy another Irish drugmaker, Warner Chilcott.
It offers generic drugs and specialty products in areas like urology and women's health. That portfolio includes the osteoporosis treatment Actonel.
Forest Labs squeezed by generics
New York-based Forest Labs has been squeezed by generic competition to some of its biggest drugs, including its anxiety and depression drug Lexapro. It also faces the loss of patent protection for Namenda in 2015. The company has launched several new drugs, including Viibryd and the lung disease drug Daliresp, to help make up for those losses.
Forest took an annual loss in fiscal 2012, its first in 15 years, and has faced pressure from billionaire investor Carl Icahn, its second-largest shareholder, according to FactSet.
Icahn declared the takeover bid a victory for activist shareholders in a tweet Tuesday.
The company has been working to cut costs under new CEO Brent Saunders, who replaced long-standing leader Howard Solomon last fall. The new leader, backed by Icahn, launched plans to cut about 500 jobs as part of a goal to trim $500 million in costs.
Tuesday's announcement comes a few weeks after Forest completed its own acquisition, a $2.9 billion purchase of Aptalis, a company that makes treatments for gastrointestinal problems and cystic fibrosis.