| FRANKFURT, April 23
FRANKFURT, April 23 Watson Pharmaceuticals
aims to announce an agreement to buy Actavis for around
$6 billion on Wednesday, in a deal making it one of the world's
biggest suppliers of generic drugs, sources familiar with the
Reuters first reported on March 21 that U.S.-based Watson
was close to buying the unlisted Swiss drugmaker to help it
compete more effectively against rivals like Teva Pharmaceutical
Industries and Novartis unit Sandoz.
One person said on Monday that the announced price on the
deal was likely to be 4.25 billion euros ($5.6 billion), which
is down on the initially reported level of 5.0-5.5 billion
The deal is important also to Deutsche Bank,
which was left holding billions of euros of Actavis debt after a
leveraged buyout in 2007 by Icelandic tycoon Bjorgolfur Thor
Bjorgolfsson. Some of that debt has been written off.
It remains unclear whether Deutsche Bank will retain a stake
in Actavis after the transaction.
Watson, Actavis and Deutsche Bank have all declined to
comment on the talks.
Unveiling the deal on Wednesday would come a day before
Deutsche Bank posts first quarter earnings. Selling down its
stake in Actavis will allow Germany's largest lender to free up
a capital buffer which it would otherwise need to set aside to
meet tougher bank safety rules.
Sources close to the transaction said 10 days ago that banks
were lining up to provide financing for Watson's acquisition,
with credit likely to include a $2 billion term loan and a $4
billion bridge to bond.
The generics sector has seen a wave of M&A in recent years
because Western governments are putting pressure on the industry
to provide drugs at the lowest possible price, which favours
large players who can produce at low costs.
Targeting Actavis is a bold move for Watson, whose previous
acquisitions include the $1.75 billion purchase of Arrow Group
in 2009, which established a foothold for the company in Europe,
and the $1.9 billion purchase of Andrx Corp in 2006.
The purchase of Actavis would be far larger but could be
made to work since there would be scope for significant
synergies, including the possible closure of some manufacturing
capacity in the United States.