Actavis confirms plan to acquire Forest Labs for about $25 billion

After a morning of speculation and rumors, generics drug major Actavis (NYSE: ACT) today confirmed that it has reached agreement to acquire US drugmaker Forest Laboratories (NYSE: FRX) in a cash and equity transaction valued at around $25 billion, or $89.48 per Forest share ($26.04 in cash and 0.3306 Actavis shares per Forest share).

The Actavis deal is by far the biggest in the pharma sector announced so far this year, and more than twice the size of the largest M&A transaction in this sector in 2013.

The per share consideration represents a premium of about 25% over Forest’s stock price, and a premium of around 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, and a growing ~$7 billion North American specialty brand business – including Alzheimer's disease treatment Namenda (memantine).