Watson purchases Actavis Group for EUR 4.25 billion

Watson Pharmaceuticals, Inc. and Actavis Group today jointly announced that Watson has entered into a definitive agreement to acquire privately held Actavis for approximately EUR 4.25 billion upfront. As a result of this acquisition, Watson will become the third largest global generics company with 2012 anticipated pro forma revenue of approximately $8 billion, Reuters reports.

Actavis, which as a stand-alone company was positioned for strong growth, has a commercial presence in more than 40 countries and markets more than 1,000 products globally. Actavis has approximately 300 projects in its development pipeline and manufactured more than 22 billion pharmaceutical doses in 2011. Actavis has more than 10,000 employees worldwide and had 2011 revenues of approximately $2.5 billion.

- 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 - said Paul M. Bisaro, President and CEO of Watson.

- 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 - Bisaro continued.

- This transaction is financially compelling, accelerating Watson's top and bottom-line growth profile for the foreseeable future. It will be immediately accretive to non-GAAP earnings before synergies, and we estimate that annual synergies of greater than $300 million can be achieved within three years. Between now and closing, we will work closely with Actavis' management to prepare for a rapid and seamless integration so that Watson can maximize the benefits of this acquisition and capitalize on the significant potential to ensure long-term growth for our shareholders - said Bisaro.

- Building on this 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. 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 - said Claudio Albrecht, Executive Chairman and CEO of Actavis.

With this transaction, Watson's international revenues are expected to increase from approximately 16% of total generic net revenues at the end of 2011 to approximately 40%. The combined company will hold a top 3 position in 11 markets and a top 5 market position in 15 markets. The combined company will have commercial operations in more than 40 countries. Actavis' exceptional global strength, including leading market positions in key established commercial markets and emerging markets in Central and Eastern Europe and Russia, complements Watson's position in established markets including the UK, France and Australia.

The acquisition will expand Watson's core leadership position in modified release, solid oral dosage and transdermal products into semi-solids, liquids and injectables. The result will be a broader and more diversified global product portfolio, and an expanded development pipeline. When combined the company will have 45 First-to-Files and 30 exclusive First-to-Files in the U.S.

The transaction is expected to be immediately accretive to non-GAAP earnings, before synergies. Including synergies, Watson anticipates the acquisition will be greater than 30% accretive to 2013 Watson non-GAAP EPS, with accretion accelerating in 2014 through organic growth and additional synergies. Watson expects to achieve annual synergies of $300 million within three years following transaction close, predominantly consisting of SG&A, R&D and corporate cost synergies, reads the statement.

Watson expects the transaction to be completed in Q4 2012.