Acquisitions have formed an integral part of
) expansion strategy with the company completing four major
acquisitions in the past few years. These include the Arrow,
Specifar, Actavis Group and Warner Chilcott acquisitions.
We view the Dec 2009 Arrow acquisition as a positive move --
it has helped Actavis expand its footprint in ex-U.S.
territories, especially in countries like Australia, New Zealand,
Brazil, Scandinavia, Germany, Central and Eastern Europe, Turkey,
Japan and South Africa. It has also boosted Actavis' product
offerings and pipeline. The acquisition has also provided Actavis
with operational expertise and manufacturing capability needed to
support its long-term investment in biogenerics.
Meanwhile, Actavis enhanced its commercial presence in key
European markets and strengthened its foothold in the Greek
pharmaceutical market through the May 2011 Specifar
The Oct 2012 acquisition of Actavis Group is a smart strategic
move. This deal has helped the company strengthen its presence in
the ex-U.S. generics market and expanded and strengthened its
We are also positive on the recently concluded $8.5 billion
stock-for-stock Warner Chilcott acquisition which makes strategic
and financial sense. The successful completion of this deal in
early October 2013 has resulted in the creation of a leading
global specialty pharmaceutical company with combined annual
revenues of about $11 billion. The combined company holds the
third position in the U.S. specialty pharmaceutical market with
annual revenues of about $3 billion.
The acquisition is expected to be accretive to Actavis' 2014
earnings per share by more than 30%. The company expects to
achieve post-tax operational synergies and related cost
reductions and tax savings of more than $400 million. Moreover,
it will provide strong operating cash flow and allow Actavis to
de-lever its balance sheet. The tax rate will also be
significantly below current levels.
Additional details will be available on Actavis' third quarter
earnings call on Oct 29. Actavis currently carries a Zacks Rank
#3 (Hold). At present,
Dr. Reddy's Laboratories
) look attractive. While Akorn is a Zacks Rank #1 (Strong Buy)
stock, Mylan and Dr. Reddy's are Zacks Rank #2 (Buy) stocks.
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