Why Actavis (ACT) and Forest Labs (FRX) Are Spiking Today

NEW YORK (TheStreet) -- Generic drug manufacturer Actavis (ACT) said Tuesday it would acquire Forest Laboratories  (FRX) for approximately $25 billion in cash and stock.

Actavis announced that it would pay the equivalent of $89.48 a share for the New York pharmaceutical company.

The acquisition also marks a massive payday for investor Carl Icahn, the second-largest shareholder of Forest Labs with an 11.32% stake in the company. "This is a huge win for ALL shareholders of Forest Labs and yet another validation of the activist investment philosophy in general," Icahn said in a statement.

Icahn fought two proxy battles and threatened a third one in order to alter Forest's leadership and strategy. He helped influence change at the top of the company last year when former Bausch & Lomb CEO Brenton Saunders replaced former Forest CEO Howard Solomon after he retired.

Actavis was rising 6.52% to $204.38 on Tuesday, while shares of Forest were spiking 28.91% to $92.03.

Must Read: Where the Bargains Are

FRX Chart

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ACT Chart

ACT data by YCharts

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