Forest Labs acquires Aptalis for $2.9 bn

US drugmaker Forest Laboratories Inc has agreed to buy privately-held specialty pharmaceutical company Aptalis for approximately $2.9 billion in an all-cash deal aiming to expand its business in the area of gastrointestinal diseases and cystic fibrosis in North America and Europe.

Forest will acquire Aptalis from global private equity firm TPG Capital which acquired Aptalis, formerly known as Axcan Pharma, for $1.3 billion in 2008.

Forest's chief executive officer and president Brent Saunders 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 – gastrointestinal 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,'' he further said.

Over the years, Aptalis has built a strong position in its specialty areas in the North America and Europe through internal product development and acquisitions.

''There is a strong business fit between Aptalis and Forest, our strategies are closely aligned, and I am confident that Forest will maximize the opportunity for our products and patients.'' said Frank Verwiel, chief executive officer of Aptalis.

The transaction is expected to add $700 million to Forest's revenues in fiscal year 2015. Forest expects to benefit $125 million in annual synergies by 2016.

The acquisition is expected to add 0.78 cents to Forest's non-GAAP earnings in fiscal year 2015.

Birmingham, Alabama-based Aptalis provides innovative therapies for gastrointestinal disorders and cystic fibrosis. Its leading brands include Zenpep, Canasa, Carafate, Rectiv, Viokace, Ultresa, and Salofalk in North America and Pylera, Lacteol, and Panzytrat in European and other markets.

The company has manufacturing facilities in the US, Canada and Europe and has approximately 1,000 employees.

Aptalis reported revenue of $688 million in fiscal year ended September 2013. Sale of its top three drugs Zenpep, Canasa and Carafate in the US accounted for more than 60-per cent of the company sales. 

New York-based Forest is a specialty pharmaceutical company largely catering to the US market. The company's branded drug portfolio covers five key therapeutic areas - central nerve system, cardiovascular, gastrointestinal, respiratory, and anti-infective.

Forest's revenue in the last fiscal year was around $3.1 billion, and the company looking to enhance its drug portfolio following the loss of patent protection for its former block-buster antidepressant drug Lexapro.

Forest intends to fund the acquisition using cash in hand and debt. The company has already secured a commitment for a $1.9-billion bridge facility.

The company has not yet initiated its previously announced share repurchase programme, due to the Aptalis acquisition and will consider it at after completion of the financing for the deal, Forest said.

The transaction is expected to close in the first half of 2014, subject to regulatory review and customary closing conditions.

TPG Capital is a leading global private equity investment firm, focused on leveraged buyout, growth capital and leveraged recapitalisation investments in distressed companies and turnaround situations. The firm's well-known investments in the healthcare sector include Biomet, Fenwal, Healthscope, IASIS Healthcare, Immucor, IMS Health, Par Pharmaceutical, Quintiles Transnational and Surgical Care Affiliates, among others.

Morgan Stanley acted as financial advisor to Forest, while Aptalis was advised by JP Morgan Securities LLC on the deal.