Actavis Going Private?

Maybe, but not yet, as the board of the Icelandic generics maker holds out for a better offer
Jul 03, 2007
By Pharmaceutical Executive

Will an investor group led by Actavis' chairman succeed in taking the Icelandic generic manufacturer private? At press time, the answer was still no.

Novator, a new investment firm led by Actavis chairman Bjorgolfur Thor Bjorgolfsson, made a bid for the company early in May. The offer: 0.98 euros a share for approximately 3.4 billion class A shares in the company, or about $4.3 billion. (Novator and its affiliates already own 38.5 percent of the class A shares.) According to Novator, that's a premium of 26 percent over Actavis' closing price for the preceding 12 months—though that same period saw Actavis' stock price nearly double. In its offer, Novator acknowledged the company's rapid growth—including 25 acquisitions in the past seven years—and proposed to delist Actavis from the OMX Nordic Exchange and increase the company's debt, arguing that the ability to take on more risk would be good for Actavis.

Maybe so, but first, Actavis' board wants to see more money. In a company release, it stated that it does not believe the offer "adequately reflects the fundamental value of Actavis or its future prospects" and recommended that shareholders reject it.

Mylan Wins Merck Generics Unit

Barr and Stada were out in the first round of bidding. A private capital consortium of Bain and Apax pulled out somewhere around $5.5 billion. Teva and Actavis stuck it out a while longer, then decided that the action was too rich for them. And the prize—the generics unit of Merck KGaA—went to Mylan Laboratories for $6.6 billion. The deal gives Merck cash to pay down the debt it racked up in its $13.6 billion acquisition of Serono last year. And it gives Mylan about $2.4 billion in annual sales. (The combined companies would have had 2006 proforma sales of about $4.2 billion and an EBITDA of $1 billion, according to Mylan.) In addition to generics operations in 90 countries, the Merck generics unit has branded products including EpiPen, a pre-filled autoinjector for epinephrine.

Mylan's financial and legal advisers were, respectively, Merrill Lynch and Cravath, Swaine & Moore. Financing is being provided through Merrill Lynch, Citigroup, and Goldman Sachs.

Merck, meanwhile, announced that it would invest $29.8 million in Archemix, a biotech based in Cambridge, MA. The investment was part of an expanded partnership focused on Archemix's R&D in aptamers—chemically synthesized nucleic acids, which have the target specificity of protein-based drugs, but can be manufactured much less expensively.

Genzyme to Acquire Bioenvision

Moving a step closer to its goal of building its presence in oncology, Genzyme will acquire Bioenvision for approximately $345 million. The two companies partnered in developing Clolar (clofarabine). The drug is marketed in the United States by Genzyme and in Europe by Bioenvision for treatment of acute lymphoblastic leukemia (ALL) in relapsed and refractory pediatric patients. It is currently in development for five additional indications related to adult acute myeloid leukemia (AML). Genzyme is also exploring additional indications, including myelodysplastic syndrome (MDS) and bone marrow transplant.

Amgen Buys Ilypsa, Alantos

Amgen went shopping in June, making key acquisitions in kidney disease and diabetes/inflammatory diseases.

First, Amgen announced that it would spend $420 million to acquire Ilypsa, a private company developing drugs for renal disorders. Ilypsa focuses on tailored nonabsorbed polymers, where the polymer itself provides the drug function. The drugs are designed to act in the gut and to clear the body through the digestive system—which is expected to reduce side effects. The company's lead candidate is ILY101, a phosphate binder, currently in Phase II as a treatment for elevated blood phosphate levels, a condition experienced by nearly all dialysis patients.

Just days later, Amgen announced its second deal: the $300 million acquisition of Alantos Pharmaceuticals. Alantos' lead candidate, ALS 2-0426, is a second-generation oral DPP-IV inhibitor for the treatment of type 2 diabetes. (The class of DPP-IV inhibitors includes Merck's Januvia [sitagliptin] and Novartis' Galvus [vildagliptin].) Phase IIa studies of ALS 2-0426 are currently being conducted by Servier, which has non-US rights to the compound.