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Watson confirms €4.3bn deal to buy Actavis

Combined firm to be third-largest generics company in the world

Watson confirms €4.3bn deal to buy Actavis

Watson Pharmaceuticals has said it plans to acquire Iceland-headquartered Actavis in a €4.3bn ($5.6bn) deal that would make the combined firm the third-largest generic drug company in the world after Teva and Novartis' unit Sandoz.

Yesterday's confirmation of the deal fulfils a commitment that Watson's chief executive Paul Bisaro made in January when he said the firm wanted to acquire another company that would help it expand its product portfolio and geographic reach.

The US company said it expected to complete the acquisition before the end of the year, with the addition of Actavis boosting earnings by 30 per cent in 2013. There are also potential cost-savings of around $300m within three years, it added.

Bisaro said that Actavis will "dramatically enhance our commercial position on a global basis, and brings complementary products and capabilities in the US". The combined company will have pro forma annual revenues of around $8bn, 20 facilities and around 17,000 employees. For comparison, Teva reported revenues of $18bn last year, while Sandoz had turnover of $9.5bn.

The Icelandic firm has followed an impressive growth trajectory in recent years, thanks to a series of small- to medium-scale acquisitions that have given it a presence in 40 countries worldwide, with a strong showing in Europe and the Asia-Pacific region.

"In a single, commercially compelling transaction, we more than double Watson's international access and strengthen our commercial position in key established European markets as well as exciting emerging growth markets, including Central and Eastern Europe and Russia," said Bisaro.

"Once the transaction is completed, approximately 40 per cent of our generic revenues will come from markets outside of the US," he added.

Actavis chief executive Claudio Albrecht also pointed to the strong portfolio afforded by the combined company, with a broader and more diversified product range, including 45 first-to-file products and 30 exclusive first-to-files in the US, as well as a strong showing in the emerging biosimilars market.

The Actavis deal follows two smaller acquisitions by Watson, including Greek generic company Specifar, which it bought for around $525m, and a $390m deal for Strides Arcolab's Australian operations.

Meanwhile, Actavis has been continuing its acquisitive strategy of late, buying Dutch company PharmaPack International and narrowly missing out on a deal for Poland's Polfa Warszawa.

26th April 2012

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