Watson Pharmaceuticals, Inc. has completed the previously announced acquisition of Andrx Corporation. The purchase price was approximately $1.9 billion. Under the terms of the merger agreement, stockholders of Andrx will receive $25.00 per share, in cash, a Watson press release stated.
The company financed the transaction with a $650 million term loan, under a new $1.15 billion senior credit facility, and funded the remainder of the transaction with cash on hand at Watson and Andrx.
Andrx, whose capabilities both augment and complement those of Watson, is considered a leader in formulating difficult-to-replicate products, allowing for a unique portfolio of pharmaceutical products. As a result of the acquisition, Watson now becomes the third largest generic pharmaceutical company in the United States, based on total prescriptions dispensed. Together with Andrx's pipeline, Watson now has 66 Abbreviated New Drug Applications (ANDAs) on file with the US Food and Drug Administration, creating exciting opportunities for growth in future years.
Allen Chao, Ph.D., Watson's chairman and chief executive officer, stated, "This acquisition is another major strategic milestone for our business as we pursue expansion of our existing product portfolio, pipeline and drug delivery technology base."
"Additionally, the Anda distribution business which offers quality generic products from manufacturers around the world will become a new operating segment within Watson, and will provide added financial stability and solid cash flow. It is my belief that our newly expanded company will create a more vibrant, effective competitor in the US generics marketplace than either Watson or Andrx could have created and sustained separately," continued Dr. Chao.
Watson has completed detailed integration planning and is proceeding with plans for a rapid transition to a combined company. Watson and Andrx have highly complementary assets which are likely to facilitate a smooth integration. Going forward, the combined Company expects to realize $30 million in annual synergies with the majority of savings coming from corporate and administrative overhead. The transaction is expected to be accretive to earnings beginning in the second half of 2007, assuming new product launches and timely resolution of the Davie, Florida manufacturing facility's Official Action Indicated status with the US Food and Drug Administration.
For over 14 years, Andrx's team of managers, scientists and technical experts have created significant products and technologies. In addition, the team of customer service representatives in Andrx's Anda division has cultivated strong customer relationships which will provide for continued growth of the distribution business. By joining now with Watson, Andrx will continue to pursue and expand the opportunities in the specialty pharmaceutical sector.
Joining the Watson executive team is Albert Paonessa III, executive vice president and chief operating officer of Anda, who will provide ongoing leadership of the newly-formed distribution segment. Paonessa will report directly to Dr. Chao.
"I am excited to welcome the Andrx staff into the Watson family," commented Dr. Chao. "The talented people of Andrx will play a strategic role in helping Watson further evolve its leadership position in generic pharmaceuticals and in product distribution services. We would like to especially thank Thomas Rice, Andrx's CEO, Angelo C. Malahias, Andrx's President and Larry Rosenthal, President of Andrx Pharmaceuticals for their hard work through this transition. We wish them continued success in their future endeavours."
Rice, Malahias and Rosenthal will be leaving the company as of November 10, 2006, the release added.