P

rocter & Gamble has confirmed that it is selling its pharmaceuticals unit to Ireland’s Warner Chilcott in a $3.1 billion cash deal.

Under the terms of the deal, Warner Chilcott is getting hold of P&Gamble's portfolio of branded drugs, including Asacol HD (mesalamine) for ulcerative colitis, the osteoporosis drug Actonel (risedronate), and co-promotion rights to Enablex (darifenacin) for the treatment of overactive bladder. Explaining the rationale behind the deal, P&G’s chief executive Bob McDonald said that his company can now “focus singularly on winning in consumer health care”.

Warner Chilcott is also getting hold of P&G’s drug pipeline and manufacturing facilities in Puerto Rico and Germany. The companies said that the majority of the 2,300 employees working on P&G's pharmaceuticals business are expected to transfer to their new owner and the transaction should close by the end of 2009, pending regulatory approvals.

Warner Chilcott chief executive Roger Boissonneault said that the deal stated that the acquisition “is a transformational, strategic move for us", turning it into a “global pharmaceutical company”. It expands the firm’s presence in women's healthcare, “establishes us in the urology market in advance of the anticipated launch of our erectile dysfunction treatments, and add gastroenterology therapies to our product portfolio".

The transaction also expands Warner Chilcott's business into 14 new countries, and cashwise, P&G's pharmaceuticals business had revenues of $2.3 billion, and net income of $540 million for the year ended June 30.

The deal has certainly gone down well with the stockholders of Warner Chilcott and its shares soared. Analysts believe the price paid is a reasonable one, as a number of P&G products will face generic competition soon. To pay for the acquisition, Warner Chilcott has received commitments from a group of lenders to provide debt facilities and an unsecured bridge facility.