Generic drugmaker Actavis, which has been the subject of intense takeover speculation, said on Monday that it had struck a deal to buy specialty pharmaceuticals company Warner Chilcott for $8.5 billion in stock.
The move comes as Actavis has spurned approaches from Canadian pharmaceutical company Valeant Pharmaceuticals International and Mylan. Analysts have said that if Actavis were to buy Warner Chilcott, it would kill the chances of its being taken over.
Warner Chilcott shareholders will receive 0.16 share of the combined company. The companies said that would equate to $20.08 per share, based on Actavis' closing share price of $125.50 on Friday.
The purchase price is a 34 percent premium to Warner Chilcott's closing share price of $15.01 on May 9, the day before the companies disclosed that they were in talks. Warner Chilcott shares have since risen and closed on Friday at $19.19, narrowing the premium to less than 5 percent.
Following the report, shares of both Warner Chilcott and Actavis were trading higher in premarket trade.
Warner Chilcott brings a portfolio of branded women's health pharmaceuticals such as the contraceptive patch to Actavis, which makes and sells generic version of drugs that are no longer protected by patents. Because Warner Chilcott is based in Ireland, the deal creates a money-saving lower tax rate for Actavis, analysts have said. The combined company would have $11 billion in sales.