Forest Labs To Buy Privately-held Aptalis For $2.9 Bln Cash

(RTTNews) - Drug maker Forest Laboratories, Inc. (FRX) agreed Wednesday to acquire privately-held specialty pharmaceutical company Aptalis Holdings, Inc. for $2.9 billion in cash from its owner private equity firm TPG Capital LP. The deal, subject to review by anti-trust authorities in the U.S. and Canada, is expected to close in the first half of 2014. Following the announcement, Forest Labs' shares are soaring nearly 15 percent in early deals.

"Aptalis is an excellent strategic and financial fit for Forest because of its strong product offerings in two therapeutic franchises that are complementary to Forest - GI in the U.S. and Canada and Cystic Fibrosis in Europe. The acquisition of Aptalis helps diversify Forest while advancing our strategy to create blockbuster therapeutic areas," Forest Lab President and CEO Brent Saunders said in a statement.

Aptalis is a U.S.-based specialty gastrointestinal and cystic fibrosis company. It provides innovative, effective therapies for unmet medical needs including cystic fibrosis and gastrointestinal disorders. North America and Europe are its main markets.

Aptalis generated fiscal 2013 sales of $688 million. TPG acquired Aptalis, formerly known as Axcan Pharma, for $1.3 billion in 2008 and merged it with Eurand Pharmaceuticals in 2011.

The deal will diversify Forest Labs' offerings in key therapeutic areas & geographies as well as complements the growing cystic fibrosis business in Europe. The deal will help add nearly $700 million to Forest Labs' fiscal 2015 revenues.

New York-based Forest Labs said it expects fund the deal through a combination of cash on hand and debt. It has already secured commitment for a $1.9 billion bridge facility.

The deal is likely to be accretive to Forest's fiscal 2015 adjusted earnings per share by about $0.78. Forest Labs also expects to achieve $125 million in cost synergies by fiscal 2015 from combining the two companies.

Faced with patent cliff, Forest has been looking for revenue-boosting acquisitions. The company had previously considered buying Aptalis, but talks stalled after Forest Labs CEO Howard Solomon announced his retirement in May. The talks then resumed after Brenton Saunders took over as the new CEO.

"Forest's acquisition of our company is a testament to the strength of the business we have built. I believe this transaction will profoundly enhance our ability to serve our patients and their caregivers as well as our employees, customers and stakeholders," Aptalis President and CEO Frank Verwiel stated.

Further, Forest Labs noted that it would consider initiating the accelerated share repurchase that was stalled due to the current deal, after the completion of the permanent financing for the deal.

FRX closed Tuesday's regular trading session at $58.76, up $0.19 on a volume of 2.71 million shares. In the past 52-week period, the stock has been trading in a range of $35.22 to $60.29.