UPDATE, 5/22/13, 12:25 p.m. EDT: Irish firm Matheson is also advising Actavis on the acquisition of Warner Chilcott. Matheson’s team is led by Dublin-based corporate partners Patrick Spicer, George Brady, and Tim Scanlon. Partners John Ryan and Shane Hogan are providing tax advice.
Less than a month after the collapse of a tentative deal that would have seen it sold to Valeant Pharmaceuticals for $13 billion, generic drug maker Actavis said Monday it has reached an agreement to acquire Irish rival Warner Chilcott in an all-stock deal worth $8.5 billion, including assumed debt.
Valeant’s potential acquisition of Actavis fell through in April amid concerns on the part of Actavis directors that the deal did not include a big enough premium, The New York Times reported at the time. Since the death of that deal, Actavis has been shrugging off takeover bids from other large drug companies, such as Mylan, the Times reported Monday, citing an anonymous source.
Instead, Actavis has turned acquiror, offering roughly $5 billion in stock for Dublin-based Warner Chilcott, while also assuming $3.5 billion of the target company’s debt. Actavis will exchange 0.16 of its own shares for each Warner Chilcott share, which translates to a purchase price of roughly $20.08 for each Warner Chilcott share. That sum represents a 34 percent premium over Warner Chilcott’s closing price on May 9, the day before the companies announced that they were in negotiations.
Based in Parsippany, New Jersey, Actavis is the product of a 2012 merger that saw Watson Pharmaceuticals pay $5.6 billion in cash for Switzerland-based Actavis Group. (Watson, which was based in Parsippany, adopted Actavis’s name as a result of that deal.) Actavis makes a range of generic drugs, including low-cost versions of cholesterol-fighting medication Lipitor and Adderall and Concerta, which are used to treat hyperactivity. In adding Warner Chilcott, Actavis says it will expand its portfolio of generic women’s health and urology products, while also adding treatments for gastroenterological and dermatological conditions and illnesses.
Once the deal closes, an event that is expected to come before the end of the year, the newly formed company will be incorporated and based in Ireland—a move that the Times notes will allow Actavis to take advantage of that country’s beneficial tax laws. Closing of the transaction depends on the approval of Warner Chilcott’s shareholders as well as the Irish High Court.
Latham & Watkins is advising Actavis on the acquisition with a team led by Orange County corporate partners Scott Shean and Charles Ruck. M&A partner Stephen Amdur, antitrust partner Michael Egge, employee benefits partner James Barrall, compliance partner David Schindler, and finance partners Wesley Holmes and Daniel Seale are also working on the deal. Partners Nicholas DeNovio and Laurence Stein are advising on tax matters and counsel Hector Armengod is also advising on antitrust matters. The Latham associates working on the transaction are Richard Butterwick, Jason Cruise, Ryan deFord, Robbie McLaren, Carol Samaan, and Jesse Sheff. David Buchen is Actavis’s chief legal officer.
Latham advised Watson on its acquisition of Actavis Group last year, while Linklaters and Clifford Chance advised Actavis Group on that transaction. Latham also landed a role on another major health care industry deal last month, when the firm advised Conceptus on its $1.1 billion sale to Bayer HealthCare.
Fried, Frank, Harris, Shriver & Jacobson is representing Bank of America Merrill Lynch and Greenhill & Company in their roles as financial advisers to Actavis on the Warner Chilcott acquisition. Corporate partners Philip Richter, Abigail Bomba, and Richard May are working on the matter, along with tax partner Alan Kaden.
Meanwhile, Warner Chilcott has turned to a Davis Polk & Wardwell team that includes corporate partners Michael Davis and H. Oliver Smith. Executive compensation partner Edmond FitzGerald, tax partner Michael Mollerus, capital markets partner Michael Kaplan, and antitrust partner Joel Cohen are also advising. The Davis Polk associates working on the matter are Ashley Bryant, James Elworth, Lee Hochbaum, and Gillian Emmett Moldowan. Warner Chilcott is being advised on matters of Irish law by local firm Arthur Cox & Co., according to Davis Polk.
In September, Davis Polk represented Warner Chilcott in connection with a $561.5 million secondary offering.