Watson Pharma climbs as FTC approves Actavis deal

PARSIPPANY, N.J. -- Shares of Watson Pharmaceuticals Inc. reached new highs Tuesday after the Federal Trade Commission cleared its acquisition of Swiss drugmaker Actavis Group.

THE SPARK: The FTC voted to approve the deal Monday, requiring Watson and Actavis to sell some assets to resolve antitrust concerns and maintain competition in the marketplace. Watson said it expects to complete the $5.6 billion purchase in late October or early November.

Watson agreed to divest a total of 21 products to preserve competition in the market. Par Pharmaceutical Cos. will buy generic versions of treatments for pain, heartburn and high blood pressure drugs. Par will get one approved generic drug made by Watson and four sold by Actavis, and nine other generics that have not yet been approved.

Watson and Actavis will sell three approved products to Sandoz, a unit of Novartis AG, including generic versions of the antidepressant Wellbutrin XL and the anxiety drug Ativan. Sandoz is getting one other pending application

The FTC said the companies will return the marketing rights to three drugs to other companies.

THE BIG PICTURE: Watson, of Parsippany, N.J., agreed to buy Actavis in April. The combined company will have about $8 billion in annual revenue, making Watson the third-largest generic drug company in the world. The deal will expand Watson's business in Russia and Central and Eastern Europe.

THE ANALYSIS: Barclays Capital analyst Douglas Tsao said the divestitures were expected and won't have a significant impact on the company. The biggest seller among the products being divested is Actavis' generic version of the pain patch Duragesic. Johnson & Johnson markets the brand-name version.

SHARE ACTION: Watson shares rose $2.16, or 2.5 percent, to $89.28 on Tuesday. Earlier the stock peaked at $89.90. Shares of Watson are up 53 percent since March 21, the day the company was first reported to be in talks with Actavis.