Watson Pharmaceuticals, the California-headquartered drug giant, was yesterday reported to be ready to announce an agreement to acquire Actavis for $6 billion, to become one of the world’s largest suppliers of generics.
Watson already has a presence in Malta after it acquired Arrow in 2009
The unlisted Swiss company has a plant in Żejtun with a staff complement of 600, which has been responsible for several successful product launches. In Malta, Actavis has a research and development facility and a regional sales and marketing unit for Malta, Cyprus, Israel and Africa.
Watson already has a presence in Malta thanks to its acquisition of the Arrow Group in December 2009 for $1.75 billion. It soon announced plans to expand the Ħal Far plant following the planned closure of a manufacturing and research facility in Canada. Watson’s acquisition of Arrow had given it a firm foothold in Europe.
Now, the deal to buy Actavis involves potential for significant synergies, implying the possible closure of some manufacturing capacity in the United States. Actavis’s global team includes more than 10,000 employees in 40 countries.
In March, Reuters had reported Watson was eying Actavis to enable it to compete more effectively against rivals like Jerusalem-headquartered Teva Pharmaceutical Industries and Novartis’s Sandoz unit.
The transaction is also important to Deutsche Bank, which was left holding billions of euros of Actavis debt after a leveraged buyout in 2007 by Icelandic tycoon Bjorgolfur Thor Bjorgolfsson. Some of that debt has been written off.
Until yesterday, it was unclear whether Deutsche Bank will retain a stake in Actavis after the transaction. Watson, Actavis and Deutsche Bank have all declined to comment on the talks.
Deutsche Bank is due to post first quarter earnings this week. Selling down its stake in Actavis will allow Germany’s largest lender to free up a capital buffer which it would otherwise need to set aside to meet tougher bank safety rules.
The generics sector has seen a wave of mergers and acquisitions in recent years because Western governments are putting pressure on the industry to provide drugs at the lowest possible price, which favours large players which can produce at low costs.