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Last week's $45.2 billion Time Warner-Comcast deal pushed the global deal tally to $336 billion so far this year – the most since 2007 – and another blockbuster deal announced this week will push that figure even higher.
On Tuesday Irish drugmaker Actavis PLC (NYSE: ACT), producer of generic and specialty urology and women's health products, agreed to buy New York-based Forest Laboratories Inc. (NYSE: FRX) for $25 billion.
Alzheimer's treatment Namenda and the antidepressant Viibryd are among Forest Labs' prescription drug offerings.
Actavis will pay $89.48 for each Forest Lab share, a 25% premium to Forest's closing price on Friday. Under terms of the deal, Forest shareholders will receive $26.04 in cash plus 0.3306 Actavis share for every Forest share.
Here's what the acquisition means for both companies – and investors…
Forest Labs' (NYSE: FRX) Branded Drugs to Boost Actavis Product Pipeline
The deal will enhance Actavis' presence in primary care doctor offices in the United States and bulk up its portfolio of branded drugs.
It will also give Actavis more negotiating power with hospitals and other care providers because it adds to Actavis' product pipeline, which has grown precipitously thanks to recent acquisitions. Last year the Dublin drugmaker bought New Jersey-based pharmaceutical company Warner Chilcott PLC in an $8.5 billion all-stock deal.
Global pharmaceutical giant Actavis formed in 2012 through a $5.6 billion tie-up between drugmaker Watson Pharmaceuticals and Actavis Group. Its pharmaceutical business markets a portfolio of more than 1,700 different dosage forms and combinations of therapeutic treatments, including bestselling osteoporosis treatment Actonel.
Forest Labs develops and offers more than 30 therapeutic treatments that address a multitude of health conditions. It recently completed a $2.9 billion purchase of Aptalis, a company that makes treatments for gastrointestinal disorders and cystic fibrosis.
The Actavis-Forest deal is a windfall for shareholders of both companies. Forest shares soared $23.43, or nearly 33%, to $93.50 after the news. Actavis surged $21.20, or 11.05%, to $208.75. Year over year, Forest has risen 96%, and Actavis is up 126%.
The deal is also a nod to the effectiveness of activist investors…