WATSON Pharmaceuticals is close to buying Swiss-based Actavis for around $7bn (£4.5bn), marking the latest deal between generics companies racing to achieve economies of scale, three sources familiar with the matter said.
The deal would involve US-based Watson, already among the world’s five largest generic drugmakers, paying between €5.0bn-€5.5bn (£4.2bn-£4.6bn) for Actavis, a business not much smaller than its own, the sources said.
After rapid expansion in the early 2000s, Actavis underwent a leveraged buyout in 2007 by Icelandic tycoon Bjorgolfur Thor Bjorgolfsson, which ultimately left Deutsche Bank holding billions of euros of its debt.
It has since been seen as a target for either an eventual initial public offering or a trade sale. Its strong presence in central and eastern Europe fits with Watson’s desire to expand in these particular emerging markets.
Spokesmen at Watson, Actavis and Deutsche Bank declined to comment yesterday.
One source said synergies in year two from buying Actavis could reach around €200m, assuming the closure of the Swiss firm’s plant in Elizabeth, New Jersey, and rationalisation of global drug development portfolios.
Watson chief executive Paul Bisaro said last month he was interested in acquisitions that would boost its generics business or its branded-drugs business, which focuses on women’s health and urology.
Watson, with a market capitalisation of around $7.5bn, had sales last year of $4.6bn.
Meanwhile, Actavis CEO Claudio Albrecht said at the end of last year that his company’s sales were expected to hit €2.1bn in 2012, up from €1.75bn in 2010.
City A.M. Reporter