Replies to post #138983 on Biotech Values

[pcrutch]

WPI seems to be weaker on the back of a WSJ article that talks about Actavis EU 300m in EBITDA in 2011. So they're paying 14-15 times that at 4.5B euros ? Seems a bit pricey even if you account for the 300M in cost synergies.

[DewDiligence]

Re: Actavis valuation

The WPI-Actavis PR in #msg-74848828 says the merged company will have 2012 pro forma sales of $8B. Inasmuch as WPI was forecasting 2012 sales of $5.4B as a standalone company (http://seekingalpha.com/article/365081-watson-pharmaceuticals-ceo-discusses-q4-2011-results-earnings-call-transcript ), we know that WPI expects Actavis to produce 2012 sales of roughly $2.6B. Thus, the $5.6B WPI is paying to acquire Actavis comes to 2.15x 2012 sales, which is a reasonable price, IMO.

In #msg-73540283 (posted on 3/21/12), I said:

… paying ~3x sales to acquire Actavis strikes me as excessive and is symptomatic of empire building. If they can get it for only 2x sales, it’s a different story.

They basically did.