DUBLIN: US pharmaceutical company Actavis on Monday agreed to buy Irish rival Warner Chilcott for $8.5 billion (6.6 billion euros) in an all-stock takeover, creating a global giant focused on women's health, gastroenterology, urology and dermatology.
"Actavis, Inc. and Warner Chilcott plc today announced they have entered into a definitive agreement under which Actavis will acquire Warner Chilcott plc in a stock-for-stock transaction valued at approximately $8.5 billion," the pair said in a joint statement.
"If successfully completed, the transaction will create a leading global specialty pharmaceutical company with approximately $11 billion in combined annual revenue, and the third-largest US specialty pharmaceutical company with approximately $3 billion in annual revenues."
Actavis added that it will swap 0.16 of a share for each Warner Chilcott share, valuing Dublin-based Warner Chilcott at about $20.08 a share. That represented a 4.5-percent premium to Friday's closing level.
The bumper transaction, which is expected to close by the end of 2013, has been unanimously approved by the boards of both companies and will generate "substantial" cost savings.
The statement added that more than $400 million in after-tax operational synergies and related cost reductions and tax savings are anticipated. Most of those savings are expected in 2014.
The two companies had already revealed earlier this month that they were in talks over a possible deal.
The enlarged Actavis group will be led by the current Actavis management team. Warner Chilcott shareholders will hold about 23 percent of the company.
"We have set as our strategic corporate objective to build a leading global specialty pharmaceutical company," added Actavis chief executive Paul Bisaro in the statement.
"The combination of Actavis and Warner Chilcott creates a strong specialty brand portfolio focused in therapeutic categories with strong growth potential, and is supported by a deep pipeline of development programs."
He added that the deal would create a "powerful" global player.
"The combination is commercially and financially compelling, and reshapes the specialty pharmaceutical universe by creating a powerful global competitor.
"It creates a company with an exceptionally strong balance sheet, coupled with a favourable tax structure to support future growth."
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