Actavis (ACT) continued its acquisition spree on Mondau morning with the purchase of Durata Therapeutics (DRTX) in a deal valued at $675 million. The Dublin based company will pay $23 in cash for every share of DRTX, or a 66% premium over Friday’s close. The offer also includes additional cash payments of up to $5 per share in the form of CVRs (contingent value rights). The deal is expected to be accretive by the end of the first year. This is the third acquisition following the $25 billion buyout of Forest Laboratories earlier this year.
The acquisition strengthens the company’s Infectious Disease portfolio with the addition of DALVANCE, for the treatment of acute bacterial skin and skin structured infections (ABSSSI). DALVANCE is the first and only IV antibiotic administered in an outpatient setting resulting in substantial cost savings to patients.
For Actavis shareholders, the acquisition is of minimal financial impact to the company’s cash position. As of the most recent quarter end, the company had nearly $4.3 billion in cash and cash equivalents. We expect to see Actavis continually active in the M&A space.
At PropThink, we’ve written extensively about publicly traded antibiotics companies, explaining why the space is ripe for consolidation. Expect Cempra (CEMP) and Tetraphase (TTPH) to move higher on the Durata news.
One or more of PropThink’s contributors are long CEMP.
