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Barr keeps hand in Pliva bidding war

New offer for Eastern Europe's biggest generics firm raises the stakes yet again

The race to become the world's third biggest generics firm is gaining momentum with the news that Barr Pharmaceuticals of the US has made an improved offer for Croatian firm, Pliva.

Barr said that its revised tender offer to acquire 100 per cent of Pliva for $2.5bn had been approved by the Croatian Financial Services Supervisory Agency. The US firm said it was offering 820 kuna ($141.62) per share, with the tender offer period set to expire on October 11.

However, some analysts have questioned whether Barr's offer will be enough to secure a takeover.

ìI expected Barr's offer to be more aggressive and amount to some 835 to 840 kuna per share,î said analyst, Hrvoje Stojic at the Croatian bank, Hypo Alpe-Adria. He added that the bid still gave room for Actavis to respond with a counter-offer.

Earlier, Pliva had said it considered the latest bid of $2.5bn (Ä1.96bn) from Icelandic rival, Actavis, to present `fair value'.

At the end of June, Barr offered to buy Pliva for 705 kuna ($1.22; Ä0.96) a share or $2.2.bn (Ä1.72bn). The company later raised its offer to 743 kuna ($1.29; Ä1) a share, or $2.3bn (Ä1.8bn) when Actavis tabled a higher offer.

The latest Actavis offer was made on August 31. Actavis owns nearly 21 per cent of Pliva, either through shares or options to buy shares.

Pliva is thought to clearly favour Barr's approach, not least because Actavis has indicated it will remove the Croatian firm's CEO, Zeljko Covic, in the event of a takeover.

In August, Pliva issued a statement saying that Barr's original offer was both `fair value' and `an attractive long-term development perspective', an opinion more positive than the one it has given on Actavis' higher offer.

After announcing Actavis' latest bid, the Croatian firm added in a statement: ìThe Supervisory Board believes it is important to note that Actavis is present in markets where Pliva is also present and where overlaps in business operations may exist.î

Analysts have indicated Pliva is concerned that a successful Actavis approach would mean job cuts in Croatia, which the Icelandic firm has stringently denied. Actavis has said it plans to maintain Pliva's Zagreb headquarters as a central part of a combined business and would list the new entity on the Zagreb stock exchange.

Whichever company buys Pliva, it will become the third biggest generics company in the world after Israel's Teva and Novartis' unit, Sandoz.

30th September 2008

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