The generic drug maker Actavis agreed on Monday to buy Warner Chilcott, a smaller rival, for about $5 billion in stock, in the latest flurry of
deal-making in the specialty drug industry.
The merger comes after Actavis’s talks to sell itself to Valeant Pharmaceuticals fell through last month. After the failure of that proposed deal, Actavis
turned to its talks with Warner Chilcott while turning down deal entreaties from
bigger drug makers like Mylan, according
to a person briefed on the matter.
Under the terms of the deal, the company will pay 0.16 of an Actavis share
for each Warner Chilcott share. At Friday’s closing prices, that amounts to
$20.08 a share, nearly 5 percent higher than Warner Chilcott’s closing price
that day. Actavis will also assume Warner Chilcott’s $3.5 billion in long-term debt.
The combined company is expected to have about $11 billion in annual
revenue, with focuses on products for women’s health, urology and dermatology.
Actavis, itself the product of a merger of Watson Pharmaceuticals of the United States and Actavis of Switzerland, now specializes in
generic drugs, including a version of Lipitor.
“We have set as our strategic corporate objective to build a leading global
specialty pharmaceutical company,” Paul M. Bisaro, Actavis’s chief executive,
said in a statement. “The combination of Actavis and Warner Chilcott creates a
strong specialty brand portfolio focused in therapeutic categories with strong
growth potential, and is supported by a deep pipeline of development programs.”
The merged company would be based in Ireland, Warner Chilcott’s current
home, to take advantage of favorable tax laws in that country.
The deal requires the approval of shareholders in both companies, as well
as the sanction of the Irish High Court.
The biggest shareholder of Warner Chilcott is Fidelity Management and
Research, the mutual fund company, which held a 10 percent stake as of earlier this month, according
to Bloomberg data. Fidelity Management is the second-largest shareholder of
Actavis, with a stake of 5.7 percent, the data showed.
Actavis was advised by Bank of America Merrill Lynch and Greenhill & Company, while Warner Chilcott was advised by Deutsche Bank.