News Feature | February 21, 2014

Actavis Acquires Forest Laboratories For $25 Billion

Source: Pharmaceutical Online

By Marcus Johnson

Pharmaceutical giant Actavis confirmed on Tuesday that it had purchased Forest Laboratories for $25 billion in a deal that involved cash and stock. The deal would make Actavis a global producer of both generic and brand drugs. While Actavis has long focused on generic drugs, Forest has been successful with branded products such as Lexapro and Namenda.

Actavis has been extremely active in acquiring pharmaceutical companies in recent years, but the purchase of Forest Laboratories is the company’s largest on record. The Forest Laboratories deal will also mark Actavis’s seventh acquisition since January of last year. Industry experts expect to see Actavis and the newly acquired Forest Laboratories combine for over $15 billion in revenue as soon as 2015. The deal sparked an increase in the shares of both Actavis and Forest Laboratories, with Actavis shares up 12% and Forest shares up 3%.

Actavis CEO Paul Bisaro released a statement upon the public acquisition announcement, saying, “Today we create a new kind of specialty pharmaceutical company, and one that’s really grounded in something different — a generic DNA. We will have a balanced portfolio of branded and generic offerings.”

Acquisitions are attractive to large pharmaceutical companies such as Actavis because they use tax inversions to escape higher tax penalties. For example, Forest Laboratories earnings can now be taxed at the Ireland rate, where Acatvis has operations, instead of the higher US rate. Bisaro stated that the acquisition will save both companies as much as $1 billion in the first few years of the new combination.

Source: http://dealbook.nytimes.com/2014/02/18/drug-makers-in-25-billion-deal/?_php=true&_type=blogs&_php=true&_type=blogs&_r=1