Big pharma, M&A, Pharma

Watson acquires Actavis for $5.9 billion in a much talked M&A deal

Posted on 27 April 2012

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Watson Pharmaceuticals and Actavis Group jointly announced that Watson has entered into a definitive M&A agreement to acquire privately held Actavis for an upfront payment of EUR4.25 billion.

As a result of this acquisition, Watson will become the third largest global generics company with 2012 anticipated pro forma revenue of approximately $8 billion.

Actavis, which as a stand-alone company was positioned for strong growth, has a commercial presence in more than 40 countries and markets more than 1,000 products globally.

Under this M&A deal, Watson will acquire Actavis for an upfront payment of EUR4.25 billion.

Actavis stakeholders could also receive additional consideration, contingent upon Actavis achieving negotiated levels of certain 2012 performance targets.

The contingent payment, if fully earned, would result in the delivery of up to 5.5 million shares of Watson common stock in 2013.

This contingent payment was valued during the negotiations at EUR250 million, based on a per share price of $60, using a Euro to U.S. dollar exchange rate of 1.32.

Watson intends to fund the cash portion of the transaction through a combination of term loan borrowings and the issuance of senior unsecured notes.

Watson currently has bridge loan commitments from BofA Merrill Lynch and Wells Fargo Bank, N.A. pending execution of its final financing plans.

Watson anticipates that the combined company will generate substantial free cash flow, enabling Watson to pay down debt quickly to below 3.0x debt to adjusted EBITDA by 2013 and to achieve a level of approximately 2.0x debt to adjusted EBITDA in 2014.

For further deal information visit Current Agreements (subscription required)

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