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Par Pharma acquired by investment firm for $1.9bn

TPG Capital will look to capitalise on growing opportunities in the generics market

Private investment firm TPG Capital has agreed to purchase Par Pharma for about $1.9bn in an effort to capitalise on the growing market for generic drugs.

Shareholders in Par, which last year made $926m, will be offered $50.00 per share by TPG as part of an agreement unanimously approved by Par's board.

The market for generic medicines is expected to grow strongly over the next few years driven by patent losses on a number of major drugs and governments' moves to look for cheaper alternatives as cuts to healthcare spending are implemented to improve efficiency.

With the acquisition of Par Pharma, TPG will gain the rights to such products as Par's generic version of Novartis Toprol XL (metoprolol succinate) for high blood pressure and a copy of AstraZeneca's allergy treatment Entocort (budesonide).

In addition, TPG will also acquire Par's smaller proprietary pharmaceuticals division Strativa, whose products include Megace (megestrol) for the treatment of appetite loss, severe malnutrition, or unexplained, significant weight loss in people with AIDS.

TPG has several major healthcare investments already, with stakes in firms such as Aptalis Pharma, Biomet, Immucor, IMS Health and Quintiles Transnational, and the acquisition of Par provides the company with an additional area of growth.

"The company is positioned to benefit from the strong macro trends of a greater focus on cost effective healthcare solutions and the increasing demands from an aging population,” said Todd Sisitsky, a partner at TPG.

Increased investment in generics was also seen recently in Actavis' acquisition of US company Watson for $5.6bn in April, 2012, in a move that made it one of the leading firms in the sector.

Under the terms of the agreement, Par can solicit superior proposals from third parties until August 24, 2012, although if none comes to fruition, the TPG transaction is expected to close by the end of the year.

Gabelli & Co analyst Kevin Kedra told Reuters that rival firms Teva, Mylan and Watson might be interested in Par, although each already has a strong footing in the US where Par is based.

Par's chair and CEO Patrick LePore said: "While my focus and that of the Par board of directors was on shareholder value, we are very pleased that Par will be acquired by TPG, a leading global private investment firm whose substantial resources and healthcare experience will enable Par to continue to invest in its future long-term growth."

18th July 2012

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