Actavis has been approached by an investment firm headed up by its own chairman which is looking to gain control of the Icelandic drugmaker.

Novator, which is led by billionaire Bjorgolfur Thor Bjorgolfsson. already holds approximately 38.5% of Actavis’ A class shares and is looking to get hold of the rest. The Icelandic investment group has made an informal bid to all A class stockholders of 0.98 euros per share, which represents a 9% premium on Actavis’ closing price on May 9 and 21% up on the average price over the last six months, valuing the company at around 3.3 billion euros.

Actavis’ board of directors limited itself to saying that it will review the offer as soon as is feasible before making its recommendation to shareholders. Novator said the price “fairly reflects the underlying value” of the company, especially when compared to other listed generic drugmakers and recent industry transactions. Explaining the bid, it said that consolidation in the generics sector is continuously gaining pace, “competition for leading positions in key markets is becoming ever more fierce” and pricing pressures continue to intensify. Given this environment, Novator argues that for the successful future growth of Actavis it needs to be taken private so it is “no longer restrained by the obligations and requirements which are placed on listed companies, including that of disclosure”.

Novator, which intends to finance a significant element of the transaction through debt funding, added that it would seek to “adopt a more entrepreneurial and hence riskier approach to the company’s operations, to cut the number of board members and have “significantly reduced public reporting responsibilities.” The investment firm concluded by saying that the added risk, arising from increased leverage “and from a more aggressive style of corporate management, is not appropriate for general investors and that they should be presented with the opportunity to exit before such changes occur.”

Record quarterly revenues

The bid comes just after Actavis announced that its first-quarter net income had fallen 15.3% to 27 million euros as a result of the group’s numerous investments in the past year, notably the acquisitions of Russia's Zio Zdorovje and Florida,USA-based Abrika Pharmaceuticals. However these purchases also lifted revenues up 11.9% to $382.7 million, making it a record quarter for the firm.

However the reporting period also saw Actavis pull out of the race to acquire the generics unit of Germany’s Merck KGaA, as the price seems to have risen to over 4.5 billion euros. The Icelandic firm said it could not justify that amount to its shareholders and it would have led to highly burdensome debt levels. If Novator’s bid is successful, Actavis could soon be competing again with the major generics players such as Barr, Teva and Novartis on the acquisition trail.