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Actavis To Acquire U.S. Generics Company Amide Pharmaceutical, Inc.; $500 Million In Cash With Up To An Additional $100 Million Payable Over Two Years Subject To Performance


10/19/2005 5:09:54 PM

REYKJAVIK, Iceland, May 20 /PRNewswire-FirstCall/ -- Actavis Group (ICEX: ACT), the international generic pharmaceuticals company, and Amide Pharmaceutical, Inc., a privately owned US generic pharmaceuticals company, announce today that Actavis has reached an agreement to acquire Amide for an initial gross consideration of US$500 million in cash with up to an additional US$100 million payable over two years subject to performance. Upon closing the acquired company is expected to have a cash balance of approximately US$40 million. The deal brings together two premier generics companies with complementary strengths in Europe and the US and represents a significant milestone in Actavis' plans to become one of the leading global companies within the sector.

Strategic rationale

The combination of Actavis' brand and product development strength and geographic coverage in Europe with Amide's strategically important foothold in the US market is expected to generate significant opportunities to drive revenue growth, margin enhancement and create further value for the enlarged Group.

  Key benefits of the transaction include:

  -- Actavis will achieve a strong presence in the US generic
     pharmaceuticals market, which would represent 18% of combined 2004
     sales on a pro forma basis

  -- The acquisition provides Actavis with a platform from which to launch
     future products into the US, the world's largest generic
     pharmaceuticals market

  -- The enlarged group will benefit from products that have been identified
     in Amide's portfolio that can be marketed in Actavis' existing markets

  -- Actavis will gain access to Amide's best in-class product development
     and regulatory capabilities in the US as well as its broad experience
     in marketing and distribution

  -- Actavis will acquire increased production capacity through Amide's US
     Food and Drug Administration ("FDA") approved manufacturing facilities
     and new plant, expected to be completed in 2006

  -- The enlarged Group will have one of the broadest portfolios in the
     generics sector with over 500 products on the market and minimal
     overlap between the respective products

  -- The enlarged Group has 136 products in its in-house development and is
     expected to file at least 15 Abbreviated New Drug Applications
     ("ANDAs") in 2005

  -- Actavis expects the acquisition to be 45%-50% accretive to profit
     before tax and 30%-35% earnings per share in the first full year
     following completion

  Amide

Founded in 1983 in New Jersey, USA, Amide develops, manufactures and sells a broad range of solid-dose generic pharmaceutical products with a portfolio of 67 marketed products in tablet and capsule forms. The company also has a strong development pipeline of 30 products and 12 ANDAs pending approval with the FDA. Furthermore, Amide expects to have 10 new product approvals in 2005. Amide employs over 200 people and its primary New Jersey facility is currently capable of manufacturing 1.5 billion tablets and capsules per annum. Furthermore, a new plant is being built in New Jersey, which will increase manufacturing capacity to 6-8 billion tablets per annum. In the year ended 31 December 2004, Amide generated revenues of US$106.7 million, with earnings before interest, tax, depreciation and amortization ("EBITDA") of US$53.2 million. Profit before tax was US$52.5 million.

Management and Group structure

On completion, the operations of Actavis Inc. in the US will be combined with the activities of Amide in New Jersey. Agreement has been reached with key members of Amide's senior management to remain with the Group, with Amide President Mr Divya C Patel becoming a member of the Actavis Executive Board. A new divisional structure within Actavis will be put in place on completion of the acquisition. Actavis' business in North America (including Amide) will form the North America Division. The divisions known as "Own-Brand" and "Third-Party Sales" will become the International Division and Third-Party Global Sales respectively.

Financing

The initial gross consideration is US$500 million in cash with up to an additional US$100 million payable over two years subject to performance. Upon closing the acquired company is expected to have a cash balance of approximately $40 million.

Actavis will partially finance the acquisition through a pre-emptive placing in Iceland of its own treasury shares (6.6%) and of newly issued shares to raise a total of EUR250 million in market value. The placing is fully underwritten by Islandsbanki hf. along with Landsbanki Islands hf. The balance of the consideration for the acquisition will be financed with a new 5-year syndicated credit facility of EUR500 million.

ABN AMRO and Bank of America will jointly arrange and underwrite the syndicated loan facility, which will partly be used to refinance Actavis' existing short- and long-term debt. It is envisaged that a third leading international bank will join the group of joint arrangers and underwriters early next week.

Financial effects of the acquisition

On a pro-forma basis, the enlarged Group would have had combined revenues of EUR537.6 million in the year ended 31 December 2004, EBITDA of EUR157.5 million and profit before tax of EUR120.8 million (see table below). Actavis expects the acquisition to be 45-50% accretive to profit before tax and 30%- 35% accretive to earnings per share in the first full year.

+------------------------------------------------+ | | 2004 | 2004 | 2004 | | EUR million | Actavis | Amide | Combined | |-------------------+---------+-------+----------| | Revenue | 451.7 | 85.9 | 537.6 | |-------------------+---------+-------+----------| | Cost of sales | 214.4 | 29.6 | 244.0 | |-------------------+---------+-------+----------| | EBITDA | 114.7 | 42.8 | 157.5 | |-------------------+---------+-------+----------| | Profit before tax | 78.5 | 42.3 | 120.8 | |-------------------+---------+-------+----------| | Net profit | 62,6 | -* | -* | |-------------------+---------+-------+----------| | Total assets | 678.5 | 67.9 | 746.4 | +------------------------------------------------+

* Not applicable, Amide is incorporated as a S-corporation for tax purposes. Amide profits are taxed at the owner level as income tax.

The acquisition is subject to the regulatory approval of the US competition authorities. Completion of the acquisition is expected to take place early during the third quarter of 2005.

ABN AMRO Corporate Finance acted as sole financial adviser to Actavis in this transaction. Legal advisor to Actavis was Dewey Ballantine LLP. Banc of America Securities LLC acted as exclusive financial advisor to Amide in connection with the transaction.

Outlook

In addition to making strategic acquisitions to lead the consolidation of a still fragmented industry, Actavis is committed to driving further organic growth through innovative product launches, penetration of new markets and regulatory approvals of new generic pharmaceuticals.

The Group continues to make good progress in the current year. As previously announced to the market, the first quarter is expected to be the slowest period of the year with no new product launches and some of the larger customers having full inventory levels. Sales for the remainder of the year are expected to be stronger as new products are launched on the market.

Management expects single digit underlying growth in 2005 but strong EBITDA to sales margins of 26% or above for the full year. For 2006, strong underlying growth is expected with EBITDA to sales margins in excess of 27%.

Commenting on the acquisition, Mr Robert Wessman, President and CEO of Actavis, said:

"This transaction is a significant step in our strategy to build one of the world's leading generic pharmaceutical companies. Amide is a highly profitable company with a broad range of marketed products, a strong product pipeline and an excellent management team and workforce. It is well positioned in the key US market and will provide the critical mass for Actavis to enter the US with its own products. The transaction brings considerable product and marketing synergies and positions us well to take advantage of further opportunities in the rapidly expanding generic pharmaceuticals market."

Mr. Divya C Patel, President of Amide, added:

"We are extremely enthusiastic about the mutual benefits to be gained from this transaction. There is an excellent strategic fit between the two companies and it provides Amide with the ability to leverage its market position as well as expand its product portfolio in the coming years. Furthermore, Actavis gains a significant platform to extend its current product offerings into Amide's US distribution channels. We look forward to joining the Actavis Group."

Analyst conference call

A webcast conference call will be held today, 18 May 2005 at 13:30 GMT (14:30 UK, 09:30 EDT), for analysts and investors. European analysts should dial in on +44(0)20 7365 1850 and US analysts should dial in on +1 718 354 1152. The password is Actavis. The webcast can be accessed through http://www.actavis.com/.

Photographs

High resolution images are available for the media to view and download free of charge from http://www.vismedia.co.uk/ .

About Actavis

The Actavis Group was founded in 1956. Actavis is an international pharmaceutical company, specialising in the development, manufacture and sale of high quality generic pharmaceuticals. The Group has also established itself as a reliable supplier of pharmaceutical intellectual property.

Headquartered in Iceland, Actavis has operations in 28 countries with around 7000 employees. In addition to development and manufacturing facilities in Bulgaria, Turkey, Malta, Iceland and Serbia, Actavis has an extensive worldwide sales network. The Group has built a strong market position in Europe and is constantly looking to establish itself in new markets. The quality of its intellectual property has resulted in Actavis and its customers being first to market with generic products when patents expire.

Forward looking statements

This press release contains forward-looking statements with respect to the financial condition, results of operations and businesses of Actavis. By their nature, forward-looking statements and forecasts involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to differ materially from that expressed or implied by these forward-looking statements. These factors include, among other things, exchange rate fluctuations, the risk that research and development will not yield new products that achieve commercial success, the impact of competition, price controls and price reductions, the risk of loss or expiration of patents or trade marks, difficulties of obtaining and maintaining governmental approvals for products, the risk of substantial product liability claims and exposure to environmental liability.

For further information, please contact: Actavis Group Robert Wessman, President & CEO (+354 535 2300) Halldor Kristmannsson, Corporate Communications (+354) 535-2300 / 840-3425 http://www.actavis.com/ Financial Dynamics London - David Yates/Julia Phillips/ Davina Langdale (+44) 207 831 3113 New York - Charles Armitstead/ Matt Dallas/ Courtney Wen (+1) 917 496 3840 or 212 850 5600

Actavis Group

CONTACT: Actavis Group, Robert Wessman, President & CEO, +354-535-2300,or Halldor Kristmannsson, Corporate Communications, +354-535-2300, +354-840-3425; Financial Dynamics, London - David Yates, Julia Phillips or DavinaLangdale, +44-207-831-3113; New York - Charles Armitstead, Matt Dallas orCourtney Wen, +1-917-496-3840, or +1-212-850-5600


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