UPDATE 2-Sale of generic drugmaker Actavis halted -sources

* Disagreements on price, dearth of buyers scupper sale

* Follows series of failed asset auctions

* Actavis and Decode fallen stars of Icelandic drugs sector

(Adds details on Decode, background, Actavis comment)

By Quentin Webb

LONDON, April 16 (Reuters) - The sale of Iceland’s Actavis, one of the world’s biggest generic drugmakers, has been put on hold because of disagreements over price and a dearth of suitors, several sources familiar with the matter said on Thursday.

The news is a blow for the once high-flying drugs sector in Iceland. Genomics pioneer Decode Genetics DCGN.O, which parlayed Iceland's unique genetic heritage into a valuable DNA database, is also struggling to map out its future.

Icelandic billionaire Bjorgolfur Thor Bjorgolfsson, whose investment vehicle Novator bought Actavis in 2007, put the debt-laden company up for sale in January, hoping to fetch 5 billion euros ($6.58 billion) or more.

However, Actavis's "aggressive stance on valuation" was a big sticking point for potential acquirers, one of the sources said. And some big potential suitors, such as Pfizer Inc PFE.N and Merck & Co Inc MRK.N, are busy with mega-mergers.

Difficult debt and equity markets mean generic rivals such as Watson Pharmaceuticals Inc WPI.N and Stada Arzneimittel AG STAGn.DE, similar in size to Actavis, would struggle to do a deal, some of the sources said.

Stada said on March 26 Actavis would be a better strategic fit than German rival Ratiopharm, which is also coming up for sale, but its finances would not support a deal.

Other companies have also ruled themselves out, including Teva TEVA.TA, the world's biggest generic drugmaker, and Novartis NOVN.VX, the parent of Teva's biggest rival Sandoz.

An Actavis spokeswoman declined to comment on the auction but said: “All strategic options continue to be reviewed and evaluated” -- leaving the door open to a future sale or other moves.


Actavis grew from nowhere to become a major force in the fast-growing generics drugs business, with a string of acquisitions.

Decode, which uses population genetics to unpick the links between gene variations and common diseases, also looked like a winner in biotech a few years back.

But slow progress in launching products and lack of access to new cash mean Decode is now struggling to refinance itself. It said on Wednesday it was using a 30-day grace period for the scheduled April 15 interest payment on its convertible notes.

Actavis’ difficulties echo several other big-ticket auctions that have run aground, as scarce debt and a grim economic outlook cause sometimes unbridgeable price gaps between buyers and sellers. [ID:nLP245609]

Big debts were another stumbling block in this case, one source said. Deutsche Bank was left holding 4 billion euros of debt backing Novator’s 2007 buyout of Actavis -- the German bank’s biggest block of unsold leveraged loans.

Actavis initially sought 10 to 15 times earnings before interest, tax, depreciation and amortisation (EBITDA) -- implying a 5 billion euros-plus price, given Actavis is expected to generate about 500 million euros of recurring EBITDA in 2009.

Deutsche Bank and Novator declined to comment. ($1=.7598 Euro) (Reporting by Quentin Webb and Ben Hirschler in London, Philipp Halstrick and Frank Siebelt in Frankfurt, and Jessica Hall in Philadelphia; Editing by Douwe Miedema and Jon Loades-Carter)