Drugmaker Forest Laboratories Inc FRX.N said it would buy specialty pharmaceutical maker Aptalis from private equity firm TPG Capital for $2.9 billion in a deal it promised would increase next year's earnings, sending its shares up nearly 14 percent.
Forest, which is facing patent expirations on several of its biggest drugs, said on Wednesday that Aptalis would add 78 cents per share to fiscal 2015 earnings before special items. The deal will also boost revenue by $700 million, it added.
Analysts had been expecting a profit of $2.86 per share and revenue of $2.9 billion for the year ending March 2015, according to Thomson Reuters I/B/E/S.
Aptalis has a number of drugs to treat cystic fibrosis and gastrointestinal disorders. Forest's portfolio includes gastrointestinal and respiratory treatments.
The deal comes after activist investor Carl Icahn pressured Forest for change and threatened a proxy fight. Long-time Chief Executive Officer Howard Solomon in May said he would retire and was replaced this fall by former Bausch & Lomb CEO Brenton Saunders.
"Investors will likely see this as the new CEO executing on his 'change agent' mandate," BMO Capital Markets analyst David Maris said in a research note.
Saunders said in a statement that Aptalis would be complementary to Forest because of its gastrointestinal therapy business in the United States and Canada and cystic fibrosis products in Europe.
He expects $125 million in cost savings from combining the two companies.
Forest expects the deal, which is subject to regulatory review, to close in the first half of this year.
TPG Capital had been trying to sell Aptalis and last year held talks with Forest and other companies, including Elan Corp, which is now part of Perrigo Co (PRGO.N), and Sun Pharmaceutical Industries (SUN.NS), Reuters previously reported. The talks with Forest were put on hold with the announcement of Solomon's retirement but resumed after Saunders took over.
TPG also made plans for an initial public offering of the Bridgewater, New Jersey-based company in case a deal did not materialize.
Forest was advised by Morgan Stanley (MS.N) and by law firms Debevoise & Plimpton LLP and Cleary Gottlieb Steen & Hamilton. Aptalis was advised by JP Morgan Securities (JPM.N) and law firm Ropes & Gray.
Forest shares were up 13.6 percent at $66.78 in early trading.
(Reporting by Caroline Humer in New York and Esha Dey in Bangalore; Editing by Jeffrey Benkoe and Lisa Von Ahn)