Barr Wins Balkan Battle

"This combination will redefine Barr's potential for success by significantly lowering the cost structure that Barr faces as a stand-alone, U.S.-based company," Downey said. "Unlike one-time cost synergies, these capabilities and more favorable cost structure will produce synergies that will increase in successive years."

Downey said he expects to the transaction to have no effect or a slightly positive effect on Barr's earnings per share for the fiscal year ending June 30. The acquisition will raise its EPS in fiscal 2008. Those predictions exclude charges related to the deal, amortization of intangible assets associated with the aqcuisition and cost savings.

One matter hanging over the deal is manufacturing problems cited by the Food and Drug Administration at a Pliva plant in Zagreb. Last month, Pliva received a warning letter from the FDA after the agency inspected the plant. At the time, Pliva said its management "is addressing this issue very seriously and is in the process of implementing a corrective action plan."

Pliva said the supply of products to the U.S. will continue. However, the FDA won't approve any new Pliva drug applications until the problems are corrected. "Management does not currently expect this to have any material impact on the company's financial outlook for 2006," Pliva said last month.

Downey said "we're convinced Pliva is on the right track" toward addressing the problems cited by the FDA.

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