Dublin, Ireland-based Actavis is digging deep to buy US group Forest Laboratories in a deal worth around $25 billion.
Actavis said it will shell out $89.48 a share – in a mixture of cash and equity – to Forest stockholders, marking a 25% premium on the latter’s closing price on Friday and a 31% hike on the 10-day average.
The move falls in line with the group’s strategy of buying speciality drugmakers to beef up its portfolio and, if completed, will combine two of the world’s fastest-growing specialty pharmaceutical companies, with combined annual revenues of over $15 billion pegged for 2015.
The merger is expected to yield double-digit accretion to non-GAAP earnings in 2015 and 2016, with significant annual free cash flow generation of greater than $4 billion in 2015, and also has the potential to realise around $1 billion in operating and tax synergies, the firms said.
Shares in Forest, which spent $2.9 billion on private group Aptalis just weeks ago, were up nearly 30% in mid-afternoon trading, while Actavis stock was up just shy of 7%, as investors on both sides of the fence welcomed the news.
Billionaire investor Carl Icahn must also be rubbing his hands together; with an 11% stake in Forest he stands to earn nearly $1.7 billion in gross profit from the deal, according to Bloomberg.
