Forest Laboratories (FRX:US) Inc., the drugmaker being acquired by Actavis Plc (ACT:US), agreed to buy Furiex Pharmaceuticals (FURX:US) Inc. for $1.1 billion in cash to expand offerings of medicines for digestive disorders.
Forest, based in New York, will pay about $95 a share for Furiex, and up to $30 a share in a contingent value right for Furiex’s eluxadoline, a treatment for irritable bowel syndrome, based on the drug’s approval, Forest said today in a statement.
The purchase won’t affect the timing of Actavis’s $25 billion acquisition of Forest announced in February, the company said. It will also bolster Actavis’s position in medicines for gastrointestinal ailments, along with Forest’s $2.9 billion acquisition of Aptalis earlier this year.
“Although Actavis doesn’t have a right to stop the deal, we don’t believe Forest would do this deal without the blessing of Actavis,” said David Maris, an analyst with BMO Capital Markets, in a phone interview from New York. “It could only help Actavis become a bigger GI company.”
Actavis, the world’s second-largest generic drug maker by market value, is buying Forest in its largest deal ever to transform into a brand-name drugmaker. The company, based in Parsippany, New Jersey, didn’t immediately return a call for comment on the Furiex acquisition.
Furiex, based in Morrisville, North Carolina, had hired Bank of America Corp. earlier this year to seek a buyer. The company markets treatments for diabetes and premature ejaculation. Furiex has said that it would apply to the U.S. Food and Drug Administration for marketing approval of its lead experimental treatment, eluxadoline, in June.
Forest also said today that it agreed to sell Furiex royalties on two products to Royalty Pharma for about $415 million upon completion of the acquisition.
“What we do like about it is that the company’s not just taking everything, they’re also divesting a few products to royalty drug companies, and it shows that they’re taking surgical precision,” Maris said.
Furiex jumped 29 percent to $103.05 in New York trading, while Actavis fell less than 1 percent to $196.90. Forest fell less than 1 percent to $89.50.
Covington & Burling LLP served as Forest’s legal counsel, Furiex was advised by Kirkland & Ellis LLP and Wyrick Robbins Yates & Ponton LLP. BofA Merrill Lynch and Credit Suisse acted as financial advisors to Furiex. Royalty Pharma was advised by Goodwin Procter LLP.
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