Actavis to acquire Forest Labs. for approximately $25 billion

DUBLIN — Actavis and Forest Labs. on Tuesday announced that they have entered into a definitive agreement under which Actavis will acquire Forest for a combination of cash and equity valued at approximately $25 billion, or $89.48 per Forest share ($26.04 in cash and 0.3306 Actavis shares for each share of Forest common stock). The per share consideration represents a premium of approximately 25% per share over Forest’s stock price, and a premium of approximately 31% over Forest’s 10-day volume weighted average stock price, as of the close of trading on Feb. 14, 2014. 

If successfully completed, the transaction will combine two of the world’s fastest-growing specialty pharmaceutical companies, with combined annual revenues of more than $15 billion anticipated for 2015.

“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, a focus on strategic, lower-risk drug development, and - most important - the ability to drive sustainable organic growth,” stated Paul Bisaro, chairman and CEO of Actavis. “Bolstered by one of the deepest and most diversified product portfolios in the industry with an exceptionally strong pipeline, this transaction creates a powerful engine for generating long-term, double-digit revenue and earnings growth.

On a pro forma combined basis for full year 2014, the combined company will have an approximately $2 billion central nervous system franchise; gastroenterology and women’s health franchises valued at approximately $1 billion each; a cardiovascular franchise that generates approximately $500 million; and urology and dermatology/established brand franchises approaching $500 million a year in sales each.

“The combination of Forest with Actavis creates a specialty company with annual sales of approximately $15 billion, a diversified portfolio and a geographically balanced business,” said Brent Saunders, CEO and president of Forest. “This compelling combination gives us more optionality to drive future growth and sustainable shareholder value due to our expanded geographic and therapeutic presence, ability to drive new product flow through R&D, strong balance sheet and consistent cash flow," he said. “Forest is a great fit with Actavis due to our strong legacy in branded specialty and primary care pharmaceuticals with a best in class commercial team, a top-notch drug development organization and a long history of successful partnerships. The acquisition builds on our blockbuster line call strategy in CNS and GI and dramatically extends our reach beyond the U.S. market,” Saunders added. “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.”

“As chairman of Actavis, I am in a unique and enviable position of having two exceptionally experienced and successful management teams committed to creating a new future for the combined company," Bisaro said. "I am especially pleased that Brent will be joining the Actavis board of directors and has agreed to work with me following the close to build a world class company focused on sustainable double digit growth. Over the next several months, as we prepare for the integration and closing, our teams will define the structure necessary to capitalize on Actavis’ global leadership in brand, generic, biosimilar and OTC pharmaceuticals.”

The combined company will be led by Paul Bisaro, chairman and CEO of Actavis. The integration of the two companies will be led by the Actavis and Forest senior management teams, with integration planning expected to begin immediately in order to assure a rapid transition to a single company following close. Actavis has agreed that three members of the Forest board of directors will be named to the Actavis board of directors following the close.

The proposed transaction has been unanimously approved by the boards of both companies, and is similarly supported by both management teams. The transaction is subject to the approval of the shareholders of both companies, as well as customary regulatory approvals, including a Hart-Scott-Rodino review in the United States.



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