Icelandic drugmaker Actavis has dropped out of the bidding to acquire Croatian generics company Pliva, leaving the way clear for rival Barr to move forward and complete the acquisition.
Actavis said it would not hike its $2.5 billion bid for Pliva – which values the latter at 795 kuna per share – any further because its offer was a “full and fair price” for the business. Barr’s latest offer of 820 kuna per share – or around $2.55 billion - has the support of Actavis’ board.
But some analysts consider that the bidding war pushed Actavis’ price tag too high, even if Barr can now claim third-place in the global generics market behind rivals Teva and Sandoz, and could compromise its ability to make further acquisitions in the fact-consolidating generics sector.
Meanwhile, Actavis appears to have left a backdoor open to allow it to re-enter the fray, saying it will “continue to follow the process of bidding for Pliva.”
Actavis has garnered a 20% stake in Pliva through share purchases on the open market, though as the terms of Barr's offer require a threshold of just 50% or more shares in Pliva to proceed, it would be a hard task for the Icelandic firm to use its stake as a blocking tactic. The Croatian government also owns around 18% of Pliva.
Barr has argued that geographic overlaps with Actavis in Europe make it a better partner for Pliva, opening up the US market to the Croatian firm. Meanwhile, the Icelandic firm claimed it would bring more to the local economy with the creation of new jobs as well as greater investment in the existing R&D and production facilities, and create a European generics house with the stature to combat the volatile pricing environment in region.
Compliance issues hit Actavis plant
Meanwhile, Actavis said compliance problems were uncovered at a facility in New Jersey, USA, during a Food and Drug Administration inspection. The agency says Actavis failed to follow adverse event reporting requirements for products made at the plant, and also used it to manufacture unapproved drugs that were incorrectly sold under US lesgislation covering ‘older drugs’, i.e. those first used so long ago they do not have FDA-approved dossiers supporting their use.
A spokesman for Actavis said the warning "will have no impact on manufacturing and Actavis will continue to manufacture, distribute and sell all products as normal." But the company will place a hold on launching new products from the plant until the compliance issues are resolved.
Actavis said the development is not expected to result in a material impact on its 2006 financial results or the group's guidance on growth and margins in 2007.