Generic drugmaker Watson Pharmaceuticals, Inc. Co. (WPI: Quote) is nearing a deal to acquire privately-held Swiss rival Actavis Group for about 4.5 billion euros or $5.92 billion, according to media reports on Tuesday. The deal is expected to be announced as early as Wednesday.
Parsippany, New Jersey-based Watson will reportedly pay 4.25 billion euros upfront and another 250 million euros on Actavis reaching specific milestones. The deal will see Watson achieve annual synergies of more than $300 million from the third year.
The deal will enable Watson to boost its international presence and compete better with larger rivals such as the world's first and second largest generic drug makers, Teva Pharmaceutical Industries Ltd (TEVA) and Mylan Inc (MYL). Swiss drug giant Novartis AG's (NVS) unit Sandoz is currently the third largest.
The deal with Actavis will see Watson propel itself as the the third largest global generic drug maker. The deal will also boost Watson's presence in Europe after it bought Greece-based Specifar Pharmaceuticals for $562 million last year, its only acquisition in 2011. Earlier, Watson's last major deal came when it acquired generic drugmaker Arrow Group plc for $1.75 billion in 2009.
In January, Watson's President and CEO Paul Bisaro had indicated that the company is eying a large-scale acquisition as it looks to expand its breadth and become more balanced through acquisitions. He was speaking at the J.P. Morgan Healthcare Conference in San Francisco.
Zug-based Actavis was taken private in 2007 by Icelandic tycoon Björgólfur Thor Björgolfsson in a deal that gave the business an enterprise value of 4.8 billion euros. The deal was financed by Deutsche Bank, which in 2008 renegotiated more than 3 billion euros in debts with Actavis and remains its major creditor. Meanwhile, Björgolfsson holds a 78 percent stake in Actavis.
Sigurdur Oli Olafsson, the former chief executive officer of Actavis, had earlier left the company to join Watson in 2010.
Watson's current offerings include generic version of cholesterol drug Lipitor and Concerta, intended for attention deficit hyperactivity disorder. The company reported in February a surge in profit for the fourth quarter mainly on strong sales of these two drugs.
Meanwhile, Actavis also has a business nearly as big as Watson's and has a formidable presence in central and eastern Europe. It has around 830 products on the market and about 350 products under development and pending registration.
In Tuesday's regular trading session, WPI is currently trading at $67.55, down $1.91 or 2.75% on a volume of 1.15 million shares. In the past 52-week period, the stock has been trading in a range of $55.00 to $73.35.
by RTT Staff Writer
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