Watson Pharmaceuticals to acquire Andrx for $1.9 billion

By Angela McDaniels

Seattle, March 13 - Watson Pharmaceuticals Inc. and Andrx Corp. said Watson agreed to acquire all outstanding shares of Andrx's common stock for $25.00 per share, or a total price of roughly $1.9 billion in cash.

The price of $25.00 per share represents a 32% premium to the stock's average price over the last 30 days, according to an Andrx news release.

The transaction will be financed with Watson cash reserves and committed bank financing, net of cash acquired from Andrx, and is expected to close within six months.

The boards of directors of both companies have approved the transaction. The consummation of the acquisition is now subject to customary closing conditions, including approval of the transaction by Andrx stockholders and the receipt of applicable U.S. regulatory approvals.

According to a Watson release, the combined entity will become the third-largest generic pharmaceutical company in the United States, based on prescriptions dispensed, and will have more than 60 abbreviated New Drug Applications in its pipeline.

Watson expects the deal to be accretive to 2007 earnings and predicted that 2007 revenue will reach $2.8 billion, based on historical revenues.

"Our acquisition of Andrx significantly supports our long-term goal of expanding our existing product portfolio and pipeline, while strengthening Watson's position in high-value, specialized sustained-release technology," Watson chairman and chief executive officer Allen Chao said in both releases.

"Andrx's manufacturing, research and development, controlled-release technology, distribution network and employees, in combination with Watson's excellent team and capabilities, create a significant vertically integrated company in the specialty pharmaceutical industry," Andrx chief executive officer Thomas P. Rice said in both releases.

Following the close of the transaction, the combined company will have three operating divisions: brands, generics and distribution. Anda, Andrx's generic distribution business, will operate and be managed as an independent division.

Watson is a specialty pharmaceutical company based in Corona, Calif., that develops, manufactures, markets and distributes branded and generic pharmaceutical products. CIBC World Markets Corp. is its financial adviser for the transaction, and Latham & Watkins LLP is acting as legal counsel.

Andrx is a pharmaceutical company based in Fort Lauderdale, Fla., that develops generic versions of controlled-release, niche and immediate-release pharmaceutical products, including oral contraceptives. Banc of America Securities LLC is its financial adviser for the transaction, and its external legal counsel is Proskauer Rose LLP and Sullivan & Cromwell LLP.

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