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Actavis Up Slightly on Silom Acquisition
Actavis plc’s shares gained 1.64% immediately after the company announced that it has acquired Thailand-based generic company, Silom Medical Company for approximately $100 million in cash. Although shares were down slightly (0.22%) in the subsequent trading session, overall shares were up 1.42% following the announcement.
With this acquisition, Actavis is now among the top-five players in the Thai generic pharmaceutical market. This acquisition will also help Actavis expand futher in the Southeast Asian region. With Silom’s diverse product portfolio, Actavis expects this acquisition to be immediately accretive to 2014 earnings. Our Take
Actavis has been in an acquisition spree of late. Acquisitions over the past two years include that of the Actavis Group in Oct 2012 and Warner Chilcott in Oct 2013.
In Feb 2014, Actavis announced its intention to acquire Forest Laboratories Inc. for a cash and equity combination of $25 billion. This acquisition will help Actavis generate sales of more than $15 billion per year and create a well-diversified portfolio for the company.
The Forest Labs acquisition will push up Actavis’ branded products revenues to 50% of total combined revenues from the current level of 30% of the standalone company’s revenues. The acquisition will also bring about significant synergies and boost the bottom line. The deal is slated to close in mid-2014.
Meanwhile, Actavis completed the divestiture of its generics commercial operations in certain markets (France, Italy, Spain, Portugal, Belgium, Germany and the Netherlands) in Western Europe to Aurobindo Pharma Ltd.
Actavis carries a Zacks Rank #2 (Buy). Some better-ranked stocks in the health care sector include Mallinckrodt plc ( MNK - Analyst Report) and Impax Laboratories Inc. ( IPXL - Analyst Report) . While Mallinckrodt carries a Zacks Rank #1 (Strong Buy), Impax holds a Zacks Rank #2 (Buy). Forest Labs also carries a Zacks Rank #2.