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Actavis 'negotiating $25bn acquisition' of Forest

Generic company reportedly in late-stage takeover talks

ActavisGeneric drug company Actavis is reported to be in late-stage talks to take over Forest Laboratories in a deal estimated to be worth some $25bn.

Both companies are remaining tight-lipped about any deal but there are expectations that an announcement may be made ahead of Actavis' fourth-quarter results later this week if an agreement comes through.

Citing sources close to the matter the Wall Street Journal suggests that the primary rationale for the deal is a continued shift for Actavis into specialty medicines to complements its generic drug operations, where it is ranked fourth in the market behind Teva, Sandoz and Mylan.

The deal would also provide economies of scale and give it the size needed to negotiate competitive positions for its medicines among US hospitals, insurers and doctors.

Actavis has steadily grown by acquisition in recent years but if the Forest deal is confirmed it will be the company's biggest-ever purchase, eclipsing last year's $8.5bn acquisition of Ireland's Warner-Chilcott as well as the $5.6bn reverse takeover by Watson in 2012.

To give an indication of the massive pace of growth for Actavis, in 2009 the company had somewhere between 1,000 and 1,500 stock-keeping units (SKUs) in its portfolio. By the end of last year - in the wake of the Warner-Chilcott deal - it was stocking more than 15,000 SKUs.

Forest had a market capitalisation of $19.34bn at the end of last week, compared with $33.4bn for Actavis, according to Thomson Reuters.

The WSJ suggests Forest's chief executive Brent Saunders - who has implemented a major restructuring and cost-cutting drive since coming on board last year - is likely to stay at the combined company, which it is understood would be led by Actavis CEO Paul Bisarro.

It is not the first time Forest has been the subject of takeover speculation in recent months. In December the Financial Times suggested AstraZeneca was considering a $15bn bid for the company.

Article by
Phil Taylor

18th February 2014

From: Research, Sales, Marketing

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