Watson Pharmaceuticals, Inc. (NYSE:WPI) shares were trading higher by 0.73% at $69.10 on Wednesday, extending its weekly gain to over 2.50%. This on reports that WPI was purchasing Actavis Group. As per reports from media, Watson Pharmaceuticals would be offering 4.5 billion euros ($5.9 billion) to Actavis Group, the Swiss drug maker. The deal which is proposed to be announced early on Wednesday would mark one of the world’s largest generic drug manufacturers.
The deal would engage a forthright payment of 4.25 billion euros along with the added fee of 250 million euros based on the earnings target of the Actavis Group for the year 2012. The additional payment is based on Actavis increasing its pre-tax profit by 13 percent for this year.
This acquisition would help reinforce Watson’s international presence. Having operations in the United States, Actavis occupies a greater share of generic drug manufacturing overseas, specifically in the Eastern Europe. Watson’s acquisition of Actavis would be the second-largest takeover of a European company by an American rival this year, according to the data provider S&P Capital IQ. The revenue increase of the company according to the last year’s reports was 28 percent coming to $4.6 billion. The deal would make the Deutsche Bank rejoice, being the largest creditor of the Actavis group. The Bank financed $5 billion leveraged buyout of Actavis by the Icelandic billionaire Bjorgolfur Thor Bjorgolfsson in 2007.
The company is all set to report its quarterly earnings on April 30, 2012. Analysts are estimating the company to rpeort $1.60 a share, up sharply from a year ago profit of $0.89 a share. Revenue is also projected to grow by 68.80% to $1.48 billion, from a year ago revenue of $846.50 million.
Analysts are bullish on Watson Pharmaceuticals, as seventeen analysts rate it as a buy or Strong Buy, none rate it as a sell and eight rate it as a hold. Over the last three months, the stock’s average rating has increased from hold to moderate buy.
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