Pliva’s supervisory board issued a statement this morning lending its wholehearted support to the improved $2.5 billion offer for the business tendered by Iceland-headquartered generics group Actavis.

The news comes as a blow to Barr Laboratories of the USA, a rival suitor for Pliva’s hand, which won approval for its own $2.4 billion bid from Pliva’s board towards the end of August. Analysts have said they expect the US company to come forward swiftly with a counter offer.

Actavis started the tug-of-war for Pliva with a $1.6 billion bid back in March that was dismissed by the Croatian’s firm board as being inadequate. Interest in Pliva is thought to stem from its strong position in the fast-growing Central and Eastern European markets, particularly the new members of the European Union, as well as a fear among the mid-ranking generics companies that they are at risk of left behind by the top two players, Teva and Sandoz.

These firms have both been snapping up smaller generics houses to gain economies of scale, broader product portfolios and wider geographic reach that are attractive to healthcare payers and make the businesses more competitive.

“The combination of Pliva and Actavis represents a superior business proposition which will best ensure the future development and growth of the combined company in all markets,” said the Croatian firm in a statement.