Actavis plans to buy Forest Labs for $25 billion

February 20, 2014

Actavis plans to purchase Forest Laboratories for approximately $25 billion in a cash and equity deal, creating a combination of “two of the world’s fastest growing specialty pharmaceutical companies, with combined annual revenues of more than $15 billion in 2015,” according to a Feb. 18 announcement.

Actavis plans to purchase Forest Laboratories for approximately $25 billion in a cash and equity deal, creating a combination of “two of the world’s fastest growing specialty pharmaceutical companies, with combined annual revenues of more than $15 billion in 2015,” according to a Feb. 18 announcement.

Under the definitive agreement between the two companies, Forest shareholders will receive $26.04 in cash and 0.3306 Actavis shares for each share of Forest common stock. This offer per share is considered “a premium” of about one-quarter percent per share above the Feb. 14 closing Forest stock price.

“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, lower-risk drug development, and most important, the ability to drive sustainable organic growth,” said Paul Bisaro, chairman and CEO of Actavis, who will lead the combined company.

“Forest is a great fit with Actavis,” according to Brent Saunders, CEO and president of Forest, who will join the Actavis Board of Directors when the purchase is completed. “The acquisition builds on our blockbuster line call strategy in CNS and GI and dramatically extends our reach beyond the U.S. market. By joining forces with Actavis, we become more relevant to key physicians and customers through blockbuster franchises in CNS, Women’s Health, GI, and Urology, as well as Actavis’ global generics business.”

In addition, the combined company will have emerging portfolios in infectious disease, respiratory, cystic fibrosis, and dermatology therapeutic areas. Five Forest products are at the NDA stage of development and are indicated for the treatment of Alzheimer’s disease, cardiovascular disease, infectious disease, COPD, schizophrenia, and bipolar disorders. The combined company plans to invest more than $1 billion annually in new product development.

“A large proportion of Forest’s $25 billion valuation is attributed to the future earnings of its emerging portfolio, a scenario which carries both significant risk and reward to Actavis,” according to Joshua Owide, GlobalData’s director of Healthcare Industry Dynamics.

The deal is expected to close in mid 2014 following shareholder and regulatory approvals.