Generic drugmaker Actavis Plc said on Tuesday it would buy Forest Laboratories Inc for about $25 billion in cash and stock, expanding its portfolio of specialty pharmaceuticals for neurological and other disorders. The deal means a major pay-day for activist investor Carl Icahn, the second-largest shareholder at Forest Labs, who waged two proxy battles and threatened a third to change its leadership and strategy.
Actavis said it would pay the equivalent of $89.48 per share, representing a premium of 25 percent to Forest's closing price on Friday. The offer comprises $26.04 in cash and 0.3306 Actavis share for every Forest share. Actavis started on its path to the $25 billion deal less than two years ago. Formerly known as US-based Watson Pharmaceuticals, it announced a plan to buy Swiss-based Actavis for about $5.6 billion. It changed its name to Actavis and last year bought Ireland's Warner Chilcott for $8.5 billion, allowing it to relocate to Dublin, where it benefits from a significantly lower tax rate. Actavis shares rose more than 7 percent on Tuesday as investors backed the latest step in the company's strategy of acquiring specialty drugmakers to boost profit margins and sales. Shares of Forest jumped nearly 30 percent. Actavis expects the deal to add to its profits in the double-digit percentages in 2015 and 2016, including about $1 billion in tax and operating savings.
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