- Creates an Innovative New Model in Specialty
Pharmaceuticals Leadership, with $15 Billion in Revenue and a
Growing ~$7 Billion North American Specialty Brand Business -
- Blockbuster Franchises in CNS,
Gastroenterology, Women’s Health, Urology and Cardiovascular -
- Broader Portfolios and New Therapeutic
Categories including Infectious Disease, Respiratory, Cystic
Fibrosis and Dermatology -
- Combination Expected to Generate in Excess of
$4 Billion in Free Cash Flow in 2015 to Drive Rapid Deleveraging
-
- Immediately Accretive to Non-GAAP Earnings;
Double-Digit Accretion Expected in 2015 and 2016 -
- Opportunity for Substantial Synergies and
Savings of ~$1 Billion -
- Anticipate Closing in Mid-Year 2014, Pending
Approvals -
Actavis plc (NYSE:ACT) and Forest Laboratories, Inc. (NYSE:FRX)
today announced that they have entered into a definitive agreement
under which Actavis will acquire Forest for a combination of cash
and equity valued at approximately $25 billion or $89.48 per Forest
share ($26.04 in cash and 0.3306 Actavis shares for each share of
Forest common stock). The per share consideration represents a
premium of approximately 25 percent per share over Forest’s stock
price, and a premium of approximately 31 percent over Forest’s
10-day volume weighted average stock price, as of the close of
trading on February 14, 2014. If successfully completed, the
transaction will combine two of the world’s fastest-growing
specialty pharmaceutical companies, with combined annual revenues
of over $15 billion anticipated for 2015.
“With this strategic combination, we create an innovative new
model in specialty pharmaceuticals leadership, with size and scale,
a balanced offering of strong brands and generics, a focus on
strategic, lower-risk drug development, and - most important - the
ability to drive sustainable organic growth,” said Paul Bisaro,
Chairman and CEO of Actavis. “Bolstered by one of the deepest and
most diversified product portfolios in the industry with an
exceptionally strong pipeline, this transaction creates a powerful
engine for generating long-term, double-digit revenue and earnings
growth.
“The combination of Actavis and Forest is expected to yield
double-digit accretion to non-GAAP earnings in 2015 and 2016, with
significant annual free cash flow generation of greater than $4
billion in 2015, enabling us to rapidly de-lever. The combination
has the potential to realize approximately $1 billion in operating
and tax synergies, before any manufacturing synergies or revenue
synergies, while we anticipate continuing to invest over $1 billion
per year in R&D.”
On a pro forma combined basis for full year 2014, the combined
company will have an approximately $2 billion CNS franchise;
Gastroenterology (GI) and Women’s Health franchises valued at
approximately $1 billion each; a Cardiovascular franchise that
generates approximately $500 million; and Urology and
Dermatology/Established Brand franchises approaching $500 million a
year in sales each.
“The combination of Forest with Actavis creates a specialty
company with annual sales of approximately $15 billion, a
diversified portfolio and a geographically balanced business,” said
Brent Saunders, CEO and President of Forest. “This compelling
combination gives us more optionality to drive future growth and
sustainable shareholder value due to our expanded geographic and
therapeutic presence, ability to drive new product flow through
R&D, strong balance sheet and consistent cash flow. The terms
of the agreement provide Forest shareholders with cash and the
opportunity to participate in the future growth of our new,
stronger combined company.
“Forest is a great fit with Actavis due to our strong legacy in
branded specialty and primary care pharmaceuticals with a best in
class commercial team, a top-notch drug development organization
and a long history of successful partnerships. The acquisition
builds on our blockbuster line call strategy in CNS and GI and
dramatically extends our reach beyond the U.S. market,” added
Saunders. “By joining forces with Actavis, we become more relevant
to key physicians and customers through blockbuster franchises in
CNS, Women’s Health, GI and Urology, as well as Actavis’ global
generics business.”
Management of the New Actavis Following Close
“In addition to being financially and commercially compelling,
this transaction fundamentally transforms Actavis, positioning it
for a new and even more exciting future,” explained Bisaro. “In
five short years, my management team has transformed Watson, and
now Actavis, from a U.S. generics company to a leader on the global
specialty pharmaceutical stage. Brent and his team, in a short
period, have made dramatic progress in rejuvenating Forest into a
leader in North American brands.
“As Chairman of Actavis, I am in a unique and enviable position
of having two exceptionally experienced and successful management
teams committed to creating a new future for the combined company.
I am especially pleased that Brent will be joining the Actavis
Board of Directors and has agreed to work with me following the
close to build a world class company focused on sustainable double
digit growth. Over the next several months, as we prepare for the
integration and closing, our teams will define the structure
necessary to capitalize on Actavis’ global leadership in brand,
generic, biosimilar and OTC pharmaceuticals.”
The combined company will be led by Paul Bisaro, Chairman and
CEO of Actavis plc. The integration of the two companies will be
led by the Actavis and Forest senior management teams, with
integration planning expected to begin immediately in order to
assure a rapid transition to a single company following close.
Actavis has agreed that three members of the Forest Board of
Directors will be named to the Actavis Board of Directors following
the close.
The proposed transaction has been unanimously approved by the
Boards of Directors of Actavis and Forest, and is enthusiastically
supported by the management teams of both companies. The
transaction is subject to the approval of the shareholders of both
companies, as well as customary regulatory approvals, including a
Hart-Scott-Rodino review in the United States.
Financially Compelling Transaction
- The acquisition is expected to generate
double-digit accretion in 2015 and 2016, including approximately $1
billion in operating and tax synergies to be realized within three
years following the close. These synergies exclude any additional
revenue or manufacturing synergies. These synergies are in addition
to standalone synergies announced publicly by Forest as part of its
Project Rejuvenate and acquisition of Aptalis.
- The combination of Actavis and Forest
will result in Specialty Brand revenues comprising approximately 50
percent of total combined company pro forma revenues, when compared
to approximately 30 percent of North American specialty brand
revenues for standalone Actavis.
- The combination would generate strong
free cash flow in excess of $4 billion in 2015.
- Strong cash flow will enable the
combined company to rapidly de-lever the balance sheet to under
3.5x debt to pro forma adjusted EBITDA by the end of 2014.
Significantly Expanded North American Specialty
Portfolio
- The combined company will create
blockbuster product franchises in the CNS, Gastroenterology,
Women’s Health, Urology and Cardiovascular therapeutic
categories.
- The combined company will have emerging
and sustainable portfolios in Infectious Disease, Respiratory,
Cystic Fibrosis and Dermatology therapeutic categories.
Expanded U.S. Specialty Sales and Marketing
- The combination creates a world-class
commercial organization competing across multiple market
segments.
- The combined company U.S. sales force
has extraordinary marketing reach with primary care physicians,
psychiatrists, neurologists, infectious disease specialists,
cardiologists, pulmonologists, gastroenterologists, OB-Gyn’s,
urologists and dermatologists.
- The combined business will be better
positioned to leverage the Actavis Specialty Brands portfolio to a
broader physician base in the United States, as a result of
Forest’s pre-eminent position in primary care sales.
Expanded Specialty Pharmaceuticals R&D Pipeline
- The combined company will have
investment in new product development in excess of $1 billion on an
annual basis.
- The combination of Actavis and Forest
will add more than a half dozen near- and mid-term R&D products
to Actavis’ robust development portfolio.
- Five Forest products are at the NDA
stage of development, including treatments for Alzheimer’s disease,
cardiovascular disease, infectious disease, as well as
Schizophrenia and bipolar disorders and treatments for COPD.
Transaction Details
In the proposed transaction, shareholders of Forest will receive
0.3306 shares of ACT common stock and $26.04 in cash for each share
of Forest. The transaction will include an election mechanism for
Forest shareholders to elect all-stock or all-cash consideration,
subject to proration in accordance with the terms of the merger
agreement. The stock component of the consideration is expected to
represent a tax-free exchange. The aggregate purchase consideration
represents a premium of approximately 25 percent above the closing
price of Forest shares on February 14, 2014. Forest shareholders
are expected to own approximately 35% of the combined company on a
pro forma basis.
Greenhill & Co. is serving as financial advisor to Actavis,
and Latham & Watkins LLP is serving as Actavis’ legal advisor.
J.P. Morgan is serving as financial advisor to Forest, and
Wachtell, Lipton, Rosen & Katz is serving as Forest’s legal
advisor.
Actavis currently has bridge loan commitments from BofA Merrill
Lynch and Mizuho Bank pending execution of its final financing
plans.
Conference Call
Actavis and Forest management will host a conference call to
discuss the transaction today at 8:00 AM EST. The number to call
from within the United States is (877) 251-7980, conference ID
97009455. From international locations, the conference call can be
accessed at (706) 643-1573 using the same conference ID. The call
will also be webcast and can be accessed through the companies'
websites at www.frx.com and www.actavis.com. To access the slides
go to Actavis' Investor Relations Web site at
http://ir.actavis.com, or directly at
http://www.videonewswire.com/event.asp?id=98186. A replay of the
conference call will also be available by calling (855) 859-2056 in
the U.S. or (404) 537-3406 outside of the U.S., conference ID
97009455.
About Actavis
Actavis plc (NYSE:ACT) is a global, integrated specialty
pharmaceutical company focused on developing, manufacturing and
distributing generic, brand and biosimilar products. Actavis has
global headquarters in Dublin, Ireland and U.S. administrative
headquarters in Parsippany, New Jersey, USA.
Actavis develops and manufactures generic, brand, branded
generic, legacy brands and Over-the-Counter (OTC) pharmaceutical
products and has commercial operations in approximately 60
countries. The Company’s North American branded pharmaceuticals
business is focused principally in the Women’s Health, Urology,
Gastroenterology and Dermatology therapeutic categories with a
strong pipeline of products in various stages of development.
Actavis also has a portfolio of five biosimilar products in
development in Women's Health and Oncology. Actavis Global
Operations has more than 30 manufacturing and distribution
facilities around the world, and includes Anda, Inc., a U.S.
pharmaceutical product distributor.
For press release and other company information, visit Actavis'
Web site at http://www.actavis.com.
About Forest
Forest Laboratories, Inc. (NYSE:FRX) is a leading, fully
integrated, specialty pharmaceutical company largely focused on the
United States market. The Company markets a portfolio of branded
drug products and develops new medicines to treat patients
suffering from diseases principally in the following therapeutic
areas: central nervous system, cardiovascular, gastrointestinal,
respiratory, anti-infective, and cystic fibrosis. Our strategy of
acquiring product rights for development and commercialization
through licensing, collaborative partnerships, and targeted mergers
and acquisitions allows us to take advantage of attractive
late-stage development and commercial opportunities, thereby
managing the risks inherent in drug development. The Company is
headquartered in New York, NY.
To learn more, visit Forest’s Web Site at www.frx.com.
Important Information for Investors and Shareholders
This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote or approval, nor shall there be any sale of securities in
any jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. In connection with the
proposed merger between Actavis and Forest, Actavis will file with
the Securities and Exchange Commission (the “SEC”) a registration
statement on Form S-4 that will include a joint proxy statement of
Actavis and Forest that also constitutes a prospectus of Actavis.
The definitive joint proxy statement/prospectus will be delivered
to shareholders of Actavis and Forest. INVESTORS AND SECURITY
HOLDERS OF ACTAVIS AND FOREST ARE URGED TO READ THE DEFINITIVE
JOINT PROXY STATEMENT/PROSPECTUS AND OTHER DOCUMENTS THAT WILL BE
FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
Investors and security holders will be able to obtain free copies
of the registration statement and the definitive joint proxy
statement/prospectus (when available) and other documents filed
with the SEC by Actavis and Forest through the website maintained
by the SEC at http://www.sec.gov. Copies of the documents filed
with the SEC by Actavis will be available free of charge on
Actavis’ internet website at www.actavis.com or by contacting
Actavis’ Investor Relations Department at (862) 261-7488. Copies of
the documents filed with the SEC by Forest will be available free
of charge on Forest’s internet website at www.frx.com or by
contacting Forest’s Investor Relations Department at (212)
224-6713.
Participants in the Merger Solicitation
Actavis, Forest, their respective directors and certain of their
executive officers and employees may be considered participants in
the solicitation of proxies in connection with the proposed
transaction. Information regarding the persons who may, under the
rules of the SEC, be deemed participants in the solicitation of the
Actavis and Forest shareholders in connection with the proposed
merger will be set forth in the joint proxy statement/prospectus
when it is filed with the SEC. Information about the directors and
executive officers of Forest is set forth in its proxy statement
for its 2013 annual meeting of stockholders, which was filed with
the SEC on July 8, 2013 and certain of its Current Reports on Form
8-K. Information about the directors and executive officers of
Actavis is set forth in its proxy statement for its 2013 annual
meeting of stockholders, which was filed with the SEC on March 29,
2013 and certain of its Current Reports on Form 8-K. Additional
information regarding the participants in the proxy solicitations
and a description of their direct and indirect interests, by
security holdings or otherwise, will be contained in the joint
proxy statement/prospectus filed with the above-referenced
registration statement on Form S-4 and other relevant materials to
be filed with the SEC when they become available.
Actavis Cautionary Statement Regarding Forward-Looking
Statements
Statements contained in this communication that refer to
Actavis’ estimated or anticipated future results, including
estimated synergies, or other non-historical facts are
forward-looking statements that reflect Actavis’ current
perspective of existing trends and information as of the date of
this communication. Forward looking statements generally will be
accompanied by words such as “anticipate,” “believe,” “plan,”
“could,” “should,” “estimate,” “expect,” “forecast,” “outlook,”
“guidance,” “intend,” “may,” “might,” “will,” “possible,”
“potential,” “predict,” “project,” or other similar words, phrases
or expressions. Such forward-looking statements include, but are
not limited to, statements about the benefits of the Forest
acquisition, including future financial and operating results,
Actavis’ or Forest’s plans, objectives, expectations and intentions
and the expected timing of completion of the transaction. It is
important to note that Actavis’ goals and expectations are not
predictions of actual performance. Actual results may differ
materially from Actavis’ current expectations depending upon a
number of factors affecting Actavis’ business, Forest’s business
and risks associated with acquisition transactions. These factors
include, among others, the inherent uncertainty associated with
financial projections; restructuring in connection with, and
successful closing of, the Forest acquisition; subsequent
integration of the Forest acquisition and the ability to recognize
the anticipated synergies and benefits of the Forest acquisition;
the ability to obtain required regulatory approvals for the
transaction (including the approval of antitrust authorities
necessary to complete the acquisition), the timing of obtaining
such approvals and the risk that such approvals may result in the
imposition of conditions that could adversely affect the combined
company or the expected benefits of the transaction; the ability to
obtain the requisite Forest and Actavis shareholder approvals; the
risk that a condition to closing of the Forest acquisition may not
be satisfied on a timely basis or at all; the failure of the
proposed transaction to close for any other reason; risks relating
to the value of the Actavis shares to be issued in the transaction;
the anticipated size of the markets and continued demand for
Actavis’ and Forest’s products; the impact of competitive products
and pricing; access to available financing (including financing for
the acquisition or refinancing of Actavis or Forest debt) on a
timely basis and on reasonable terms; the risks of fluctuations in
foreign currency exchange rates; the risks and uncertainties
normally incident to the pharmaceutical industry, including product
liability claims and the availability of product liability
insurance on reasonable terms; the difficulty of predicting the
timing or outcome of pending or future litigation or government
investigations; periodic dependence on a small number of products
for a material source of net revenue or income; variability of
trade buying patterns; changes in generally accepted accounting
principles; risks that the carrying values of assets may be
negatively impacted by future events and circumstances; the timing
and success of product launches; the difficulty of predicting the
timing or outcome of product development efforts and regulatory
agency approvals or actions, if any; market acceptance of and
continued demand for Actavis’ and Forest’s products; costs and
efforts to defend or enforce intellectual property rights;
difficulties or delays in manufacturing; the availability and
pricing of third party sourced products and materials; successful
compliance with governmental regulations applicable to Actavis’ and
Forest’s facilities, products and/or businesses; changes in the
laws and regulations affecting, among other things, pricing and
reimbursement of pharmaceutical products; changes in tax laws or
interpretations that could increase Actavis’ consolidated tax
liabilities; the loss of key senior management or scientific staff;
and such other risks and uncertainties detailed in Actavis’
periodic public filings with the Securities and Exchange
Commission, including but not limited to Actavis’ Annual Report on
form 10-K for the year ended December 31, 2012 and from time to
time in Actavis’ other investor communications. Except as expressly
required by law, Actavis disclaims any intent or obligation to
update or revise these forward-looking statements.
Forest Cautionary Statement Regarding Forward-Looking
Statements
This release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
Such forward-looking statements include, but are not limited to,
statements about the benefits of the acquisition of Forest by
Actavis, including future financial and operating results, Forest’s
or Actavis’ plans, objectives, expectations and intentions and the
expected timing of completion of the transaction. It is important
to note that Forest’s goals and expectations are not predictions of
actual performance. Actual results may differ materially from
Forest’s current expectations depending upon a number of factors
affecting Forest’s business, Actavis’ business and risks associated
with acquisition transactions. These factors include, among others,
the inherent uncertainty associated with financial projections;
restructuring in connection with, and successful closing of, the
acquisition; subsequent integration of the companies and the
ability to recognize the anticipated synergies and benefits of the
acquisition; the ability to obtain required regulatory approvals
for the transaction (including the approval of antitrust
authorities necessary to complete the acquisition), the timing of
obtaining such approvals and the risk that such approvals may
result in the imposition of conditions that could adversely affect
the combined company or the expected benefits of the transaction;
the ability to obtain the requisite Forest and Actavis shareholder
approvals; the risk that a condition to closing of the acquisition
may not be satisfied on a timely basis or at all; the failure of
the proposed transaction to close for any other reason; risks
relating to the value of the Actavis shares to be issued in the
transaction; access to available financing (including financing for
the acquisition or refinancing of Forest or Actavis debt) on a
timely basis and on reasonable terms; the difficulty of predicting
FDA approvals, the acceptance and demand for new pharmaceutical
products, the impact of competitive products and pricing, the
timely development and launch of new products, and the risk factors
listed from time to time in Forest Laboratories’ Annual Report on
Form 10-K, Quarterly Reports on Form 10-Q and any subsequent SEC
filings. Forest assumes no obligation to update forward-looking
statements contained in this release to reflect new information or
future events or developments.
ActavisInvestors:Lisa DeFrancesco, (862)
261-7152orMedia:Charlie Mayr, (862) 261-8030David Belian,
(862) 261-8141orForestInvestors:Frank J. Murdolo,
(212) 224-6714orMedia:Amanda Kaufman, (646) 231-7316
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