Reuters: Mergers News: UPDATE 1-Watson to buy Actavis for at least 4.25 bln euros

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UPDATE 1-Watson to buy Actavis for at least 4.25 bln euros Apr 25th 2012, 20:42 Wed Apr 25, 2012 4:42pm EDT April 25 (Reuters) - Watson Pharmaceuticals Inc said on Wednesday it agreed to buy Actavis Group for at least 4.25 billion euros ($5.60 billion), in a deal that cements its status as one of the world's biggest suppliers of generic drugs. Reuters first reported on March 21 that U.S.-based Watson was close to buying the Swiss drugmaker to help it compete more effectively against rivals Teva Pharmaceutical Industries and the Novartis unit Sandoz. The generics sector has seen a wave of mergers in recent years as Western governments pressure the industry to provide drugs at the lowest possible price, favoring large players who can produce at the lowest cost. The deal is important also to Deutsche Bank, which was left holding billions of euros of Actavis debt after a leveraged buyout in 2007 by Icelandic tycoon Bjorgolfur Thor Bjorgolfsson. It comes a day before Deutsche Bank posts first-quarter earnings. Selling down its stake in Actavis will allow Germany's largest lender to free up a capital buffer that it would otherwise need to set aside to meet tougher bank safety rules. Under the terms of the agreement, Watson will make an upfront payment of 4.25 billion euros. Actavis stakeholders also could receive a payment valued at 250 million euros during negotiations should Actavis achieve certain 2012 performance targets, the company said. Watson said the deal would immediately add to earnings and estimated annual cost savings and other synergies of more than $300 million within three years. Watson shares rose 4 percent in after-hours trading after the deal was announced. Watson shares had already climbed more than 18 percent since the Reuters report. The acquisition is Chief Executive Officer Paul Bisaro's biggest splash since he took over at Watson in 2007 after 15 years at rival generic drugmaker Barr Pharmaceuticals. The CEO has been telling Wall Street he was interested in acquisitions to boost the generics business or its branded-drugs unit that specializes in women's health and urology. Actavis will add valuable exposure to developing markets in eastern Europe. Fast-growing emerging markets are a key focus for drug companies, as growth stalls in Western countries and pricing pressure increases on off-patent generic medicines. Link this Share this Digg this Email Reprints

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