Forest Labs To Buy Clinical Data For At Least $898.7 Million
Last update: 2/22/2011 8:33:44 AM
DOW JONES NEWSWIRES Forest Laboratories Inc. (FRX) said it will buy Clinical Data Inc. (CLDA) for at least $898.7 million, as it looks to capitalize on Clinical Data's newly approved Viibryd antidepressant drug. According to terms of the deal, Forest Labs will pay $30 a share in cash for each Clinical Data share--a 12% discount from their closing price of $33.90 on Friday. The deal also includes a contingent consideration of $6 a share based on milestones related to Viibryd that could boost the price tag on the deal to $1.08 billion.
Shares of Forest Labs plunged 6.8% to $32 in premarket trading as the company said the deal is expected to hurt its per-share earnings for the next three fiscal years, with the bottom line being dinged by 55 cents to 65 cents a share for fiscal 2012. Forest Labs said the deal may add to its bottom line during fiscal 2014.
Clinical Data shares closed Friday at $33.90 and were inactive premarket. Forest Labs noted that the $30-a-share offer is a 6.6% premium to the average trading price of Clinical Data stock since the first trading day after it announced the approval of Viibryd.
"We believe that we are uniquely positioned to bring Viibryd to market in light of our long and successful experience of clinical development and expertise in the antidepressant market," said Forest Labs Chairman and Chief Executive Howard Solomon. "This transaction is consistent with our strategy to acquire new products that will help offset the loss of revenues due to patent expiries."
Consolidation has been a theme of the drug-making and developing industry of late, as companies have been buying each other up in an attempt to insulate themselves from revenue lost when patents on drugs expire, allowing much cheaper generic versions of drugs to hit the market. The deal has been approved by both companies' boards of directors and is expected to close in the second quarter.
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