After a month of speculation, Actavis has announced it is buying Warner Chilcott in a stock-for-stock agreement worth $8.5 billion.
The generics major, which itself was reportedly the subject of a $15 billion takeover offer from Mylan and an approach from Valeant Pharmaceuticals International, noted that Warner Chilcott stockholders will receive 0.160 shares of the 'new' Actavis for each share they own. This equates to a value of $20.08 and represents a 43% premium compared to its price for the 30 days ending on May 9, (the day before the firms disclosed they engaged in preliminary discussions).
If completed, the transaction will create a company with $11 billion in combined annual revenues, and Actavis chief executive Paul Bisaro said the deal "reshapes the specialty pharmaceutical universe by creating a powerful global competitor…with an exceptionally strong balance sheet, coupled with a favourable tax structure". Actavis says the deal should add 30% to earnings per share in 2014, as it would pay less tax when it incorporates in Ireland, where Warner Chilcott is based.
Mr Bisaro added that the combination "provides a substantial foundation to support the successful launch of new products over the next several years, particularly in women's health".