Watson acquires Specifar for $562 million

In a joint announcement, Watson Pharmaceuticals, Inc. and Specifar Pharmaceuticals S.A. announced Watson’s acquisition of priavetly-held Specifar for 400 million euros ($562 million) in cash and certain contingent consideration.

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Parsippany, N.J.—In a joint announcement, WatsonPharmaceuticals, Inc. and Specifar Pharmaceuticals S.A. announced Watson'sacquisition of priavetly-held Specifar for 400 million euros ($562 million) incash and certain contingent consideration. Per the agreement, Specifar's formerowners could receive additional consideration based on esomeprazole's futureprofits during its first five years of sales, up to a maximum of 40 millioneuros ($56.3 million). The acquisition, which was signed and closedsimultaneously, was funded by Watson's cash on hand as well as borrowings fromits revolving credit facility. Watson expects the deal to be immediatelyaccretive to its non-GAAP earnings.
"We are very pleased that Specifar has become part of ourglobal organization. We look forward to working with the management team tocontinue Specifar's growth and to expanding the opportunities for successwithin Watson," says Paul Bisaro, Watson's President and CEO.
Bisaro notes that "the strategic significance of thiscombination is substantial." Specifar develops and out-licenses products aroundthe world, bolstering Watson's European and global commercial presence,particularly in the Greek pharmaceutical market. The company has eight productsthat are currently filed in the European Union (EU) and ranks in the top fivein the Greek branded-generic market. Specifar's portfolio in the marketcontains more than 30 products, and it also sells products in Greece under theAlet Pharmaceuticals brand. Specifar also has a generic version of Nexium,esomeprazole, which Bisaro says "represents a significant upside potential forWatson." The product could be ready for market in Europe by the fourth quarterof 2011.
"Watson also gains a substantial commercial position in theGreek branded-generic market where the Specifar and Alet brands currently rankin the top five, Watson can leverage its portfolio of products through theseeffective sales platforms. Greece's generic product utilization is currentlyone of the lowest in Europe, providing us with a significant opportunity tocapitalize on growth in this market," Bisaro continued.
Currently, Specifar produces its generic pharmaceuticalproducts in an EU-approve facility in Athens, with a new facility underconstruction just past Athens. The new facility will give Specifar the abilityto manufacture an additional 3 billion to 5 billion doses annually, in additionto the approximately 1 billion doses its current Athens facility produces, and EUcertification for the facility is expected mid-2012.
"Watson will now have a powerful product developmentcapability recognized throughout the industry for its strong track record ofsuccessfully launching products in key European markets, supported by anaccomplished R&D and regulatory capability," says Bisaro. "The developmentbusiness will continue to develop and market products to third parties underthe Specifar name and now will also develop products for Watson's commercialgroups worldwide. In addition, we intend to expand Specifar's developmentcapabilities and create a center of excellence for product development ininternational markets. We also believe that Specifar's European managementexpertise and existing business relationships will support Watson's current andfuture commercial expansion in European countries."
Jeffries & Company, Inc. served as financial advisor forWatson in the acquisition, while Rothschild and Eurobank EFG served asfinancial advisor for Specifar.
SOURCE: Watson Pharmaceuticals. Inc. press release

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