Actavis, the generic drug maker, has been talked about over speculation of being taken over, is planning to buy Ireland’s Warner Chilcott the specialty pharmaceutical firm for a price of $5 billion.
Both companies announced the deal would be all in stock and has a value including all debt of more than $8.5 billion.
This move comes at a time when Actavis spurned the approaches of Valeant Pharmaceutical International a pharmaceutical company based in Canada, as well as from Mylan, Inc. Pharmaceutical analysts said if the acquisition by Actavis of Warner Chilcott goes through it would end any chance of it being acquired by another company.
Shareholders of Warner Chilcott will receive a 0.16 share in the new combined company. Both companies said the price for the combined company would equal a price of $20.08 a share, which is based on the closing price of Actavis on Friday of $125.50.
The price to purchase Warner is a 34% premium over the share price at closing on May 9 of $15.01, which is the day prior to the companies disclosing their talks. However, since then, the share price for Warner Chilcott has increased and on Friday closed at $19.19. That narrowed the premium for the sale to only 5%.
Warner Chilcott shares increased by 2.8% in pre-market trading on Monday and shares of Actavis were up over 2.5%. Warner Chilcott has branded health pharmaceuticals for women in its portfolio, while Actavis makes generics of different drugs that no longer fall under patent protection.