Actavis confirms plan to acquire Warner Chilcott, in $8.5 billion deal

US generics major Actavis (NYSE: ACT) revealed today (May 20) that it has entered into a definitive agreement to acquire Ireland-based specialty drugmaker Warner Chilcott (Nasdaq: WCRX) in a stock-for-stock transaction valued at around $8.5 billion (including $3 billion of debt). Actavis’ shares gained 2.6% to $128.70 in premarket trading, while those of Warner Chilcott rose 3.3% to $19.85.

The news follows confirmation last week that the two companies were in merger discussions (The Pharma Letter May 13), and the failure of a rumored takeover offer for the Irish firm from Canada’s Valeant Pharmaceuticals (TSX: VRX) – which had reportedly bid $13 billion (TPL April 28).

If successfully completed, the transaction will create a leading global specialty pharmaceutical company with about $11 billion in combined annual revenue, and the third-largest US specialty pharmaceutical company with around $3 billion in annual revenues focused on core therapeutic categories of Women's Health, Gastroenterology, Urology and Dermatology. The proposed transaction has been unanimously approved by the boards of Actavis and Warner Chilcott, and is supported by the management teams of both companies.