Dublin-based Actavis to buy Forest Labs for $25 billion

Actavis, the world's second-largest generic-drug maker by market value, is to buy Forest Laboratories in a cash and stock deal valued at about $25 billion.

Actavis will pay the equivalent of $89.48 per share, representing a premium of 25 per cent to Forest’s Friday close. The offer comprises $26.04 in cash and 0.3306 Actavis shares for every Forest share.

Forest had a market value of $19.3 billion at the close of trading last Friday.

Dublin-headquartered Actavis was the most active buyer of drug companies over the past three years, making $14.4 billion of purchases.

The company depends on mergers and acquisitions to sustain earnings growth, since developing new drugs through research and development is so costly, said Ori Hershkovitz, a partner at Sphera Funds Management.

Actavis rose 0.1 per cent to close at $191.88 on February 4 in New York Stock Exchange trading, giving the company a market value of $33.4 billion.

Forest Labs climbed 1.5 per cent to $71.39. US markets were closed yesterday for a holiday. Forest was one of a number of potential suitors rumoured to be interested in acquiring Irish drugmaker Elan when it was put on the market by its management last year

Forest currently employs more than 320 people in Ireland and makes two blockbuster drugs here: antidepressant Lexapro, which went off patent last year, and Alzheimer’s therapy Namenda, which is due to face patent expiry in 2015.

The acquisition would be a win for billionaire investor Carl Icahn, who gained a board seat at Forest in 2012 and is the second-largest shareholder, according to data compiled by Bloomberg.

Actavis was formerly known as Watson Pharmaceuticals. The company in 2012 acquired Switzerland-based Actavis and took on the Actavis name. Last year, it purchased Warner Chilcott for $9.2 billion including net debt in a deal that enabled the company to expand in women's health and urology.

That purchase gave the company an Irish corporate domicile that lowered its tax rate.

Agencies