NEW YORK (The Deal) -- Dublin-based generic drug company Actavis (ACT) on Tuesday unveiled a $25 billion agreed cash-and-stock offer for New York rival Forest Laboratories (FRX) to expand in branded drugs as a pharmaceuticals consolidation continues.
Actavis, which has it main operations in Parsippany, N.J., said it would pay 0.3306 of its own shares plus $26.04 in cash, valuing Forest shares at $89.48, a 25% premium over the target's Monday close. The fusion would create a company with $15 billion in sales this year.
"With this strategic combination, we create an innovative new model in specialty pharmaceuticals leadership, with size and scale, a balanced offering of strong brands and generics, a focus on strategic, lower-risk drug development," said Actavis Chairman and CEO Paul Bisaro in a statement.
Both boards have approved the transaction, which comes on the heels of Actavis' $8.5 billion acquisition of specialty pharmaceutical company Warner Chilcott plc last year. Actavis hopes Forest's broad U.S. footprint will allow it to market many of the branded drugs it won in the Warner Chilcott deal to the world's biggest market.
The merger will leave Actavis with blockbuster drugs - products with sales above $1 billion- across several areas, including central nervous system, gastroenterology, urology, cardiovascular and women's health. Actavis expects the deal to boost non-GAAP earnings by double digits in 2015 and 2016, and to generate about $1 billion in operating and tax synergies alone, before any manufacturing synergies or revenue benefits.
Global drug companies have been beefing up for years as governments tighten heathcare budgets and insurance companies and hospital networks team up to gain bargaining power. Most recently, Cardinal Health Inc. offered to buy private equity-backed AssuraMed Holdings Inc., for $2 billion to tap the target's home healthcare activities for its disposable medical products.