Forest to buy Aptalis for $2.9 billion
pharmafile | January 9, 2014 | News story | Sales and Marketing | Forest, aptlias, canasa, maris
Forest Laboratories will spend around $2.9 billion to purchase Aptalis, a privately-held US firm specialising in treatments for gastrointestinal disorders and cystic fibrosis.
Forest says that it intends to acquire Aptalis from its shareholders and the transaction will be funded by both cash and debt.
The US firm adds that it has also secured commitment for a $1.9 billion bridge facility within the deal. The process is expected to close in the first half of this year, pending regulatory review.
This latest buy comes hot on the heels of ‘Project Rejuvenate’ which will see Forest restructure and shed jobs in a bid to save $500 million in costs by the end of the financial year 2016.
Announcing the plan in December last year, it said that more than one fifth – $110 million – of that figure is expected to come via redundancies and other ‘headcount savings’, with virtually no part of Forest immune from the chop except for the sales force, and those working on submissions for late-stage R&D programmes.
Brent Saunders, chief executive and president of Forest Laboratories, said: “Aptalis is an excellent strategic and financial fit for Forest because of its strong product offerings in two therapeutic franchises that are complementary to Forest – GI in the US and Canada and cystic fibrosis in Europe.
“The acquisition of Aptalis helps diversify Forest while advancing our strategy to create blockbuster therapeutic areas.”
It also seems to have gone down well with investors as Forest’s stock rose 16% yesterday after what has been a fairly sluggish 2013, and the firm lost protection on its blockbuster antidepressant Lexapro in March 2012, with little to replace its revenue.
This new deal – in-line with the expected job cuts – should help to shore up the firm in the medium-term and help deliver some new revenue growth.
In fact Saunders added that he expects this deal to help grow the sales of products from both Forest and Aptalis, while seeing $125 million in cost synergies from combining the two companies.
In addition, the acquisition is expected to add nearly $700 million in revenue by 2015. Saunders points out that the deal should also add $0.78 to earnings per share next fiscal year, whilst also lowering the firm’s debt.
“Investors will likely see this as the new CEO executing his ‘change agent mandate,’” said David Maris, an analyst at BMO Capital Markets, in a note to clients. “This deal solves more problems than it creates in the intermediate term, and as such, should result in significantly higher estimates and a boost to the shares.”
Aptalis sales
Aptalis had sales of $688 million last year, led predominately by the US sales of Canasa, Carafate, and Zenpep, which made up 60% of revenue.
Meanwhile, international sales accounted for around 15% of revenues and Aptalis Pharmaceutical Technologies, a third-party delivery technology provider and drug manufacturer, accounted for approximately 15 per cent.
Frank Verwiel, chief executive of Aptalis said: “Aptalis has built a strong position in the North American and European gastroenterology and cystic fibrosis markets through internal product development and acquisitions of products and companies over the last few years.
“I’m proud of all that our team has accomplished, and Forest’s acquisition of our company is a testament to the value we have created and the strength of the business we have built. There is a strong business fit between Aptalis and Forest, our strategies are closely aligned, and I am confident that Forest will maximise the opportunity for our products and patients.”
Largely focussed on the US market, Forest currently works in five main therapy areas: central nervous system, cardiovascular, gastrointestinal, respiratory and anti-infectives.
Ben Adams
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