Forest Laboratories to be Acquired by Actavis

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It was announced this week that Forest Laboratories and Actavis plc have come to an agreement that says Actavis will acquire Forest for $25 billion. The deal is for cash and equity, according to MarketWatch.

Should the deal be completed successfully, it would merge two of the fastest-growing pharmaceutical companies out there today. They have an anticipated combined annual revenue of more than $15 billion for 2015.

  

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“With this strategic combination, we create an innovative new model in specialty pharmaceuticals leadership, with size and scale, a balanced offering of strong brands and generics, a focus on strategic, lower-risk drug development, and – most important – the ability to drive sustainable organic growth,” said Paul Bisaro, Chairman and CEO of Actavis. “Bolstered by one of the deepest and most diversified product portfolios in the industry with an exceptionally strong pipeline, this transaction creates a powerful engine for generating long-term, double-digit revenue and earnings growth.”

Bisaro continued with, “The combination of Actavis and Forest 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, enabling us to rapidly de-lever. The combination has the potential to realize approximately $1 billion in operating and tax synergies, before any manufacturing synergies or revenue synergies, while we anticipate continuing to invest over $1 billion per year in R&D.”

The CEO and President of Forest, Brent Saunders, said, “The combination of Forest with Actavis creates a specialty company with annual sales of approximately $15 billion, a diversified portfolio and a geographically balanced business. This compelling combination gives us more optionality to drive future growth and sustainable shareholder value due to our expanded geographic and therapeutic presence, ability to drive new product flow through R&D, strong balance sheet and consistent cash flow. The terms of the agreement provide Forest shareholders with cash and the opportunity to participate in the future growth of our new, stronger combined company.”

The financial advisor for Actavis is that of Greenhill & Co. Their legal counsel is Latham & Watkins LLP. The legal counsel for Forest is Wachtell, Lipton, Rosen & Katz and their financial advisor is J.P. Morgan.

“Forest is a great fit with Actavis due to our strong legacy in branded specialty and primary care pharmaceuticals with a best in class commercial team, a top-notch drug development organization and a long history of successful partnerships. The acquisition builds on our blockbuster line call strategy in CNS and GI and dramatically extends our reach beyond the U.S. market,” added Saunders. “By joining forces with Actavis, we become more relevant to key physicians and customers through blockbuster franchises in CNS, Women’s Health, GI and Urology, as well as Actavis’ global generics business.”