PARSIPPANY, N.J. — Watson Pharmaceuticals Inc. plans to buy Actavis Group for 4.25 billion euros ($5.6 billion).
Announced late Wednesday, the deal comes after recent buzz of a potential Watson acquisition of Switzerland-based Actavis by industry analysts.
With the agreement, expected to close in the fourth quarter, Watson will become the world’s third-largest generic drug manufacturer, with 2012 pro forma revenue of approximately $8 billion.
"The acquisition of Actavis will create the third-largest global generics company, substantially completing Watson’s expansion as a leading global generics company. Actavis dramatically enhances our commercial position on a global basis and brings complementary products and capabilities in the United States," Paul Bisaro, president and chief executive officer of Watson, said in a statement.
"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," Bisaro noted. "The transaction achieves Watson’s stated strategic objective of expanding and diversifying our business into a truly global company. Once the transaction is completed, approximately 40% of our generic revenues will come from markets outside of the U.S."
Actavis has a commercial presence in more than 40 nations and markets more than 1,000 products globally. The company has about 300 projects in its development pipeline and manufactured more than 22 billion pharmaceutical doses in 2011. With over 10,000 employees worldwide, Actavis had 2011 revenue of approximately $2.5 billion.
"Today marks a milestone in the history of Actavis. For two years, I have had the pleasure of working together with the newly formed Actavis management team and our stakeholders who have led the company into a new phase," stated Claudio Albrecht, executive chairman and CEO of Actavis. "We have successfully placed Actavis in a strong position to meet the future growth opportunities in the generic pharmaceutical industry."
Albrecht noted that, for Actavis, the agreement builds on a strong foundation. "The combination of Watson and Actavis will result in a company of the size required to position itself as a strong player in the generic pharmaceutical industry," he explained. "The two companies are an ideal complementary fit that will enable the combined company to enhance its position among the industry leaders. Additionally, together Watson and Actavis will be well placed in the fast-paced and dynamic biosimilars market."
Besides the $5.6 billion upfront payment by Watson to Actavis, Actavis stakeholders could also receive a contingent payment based on 2012 performance targets achieved by the company. The contingent payment, if fully earned, would result in the delivery of up to 5.5 million shares of Watson common stock in 2013.
