) has received a binding offer for its generics commercial
operations in seven Western European countries (France, Italy,
Spain, Portugal, Belgium, Germany and the Netherlands) from
India-based Aurobindo Pharma Limited. Total value of the deal is
expected to be €30 million.
If the deal goes through, Aurobindo Pharma will acquire Actavis'
pharmaceutical commercial infrastructure including personnel,
commercial infrastructure, products, marketing authorizations and
dossier licenses in the covered countries. Aurobindo Pharma
estimates that the net sales of the acquired businesses will be
approximately €320 million in 2013, representing an increase of
more than 10% from the year ago period. The companies will also
enter into a supply agreement.
The divestment will allow Actavis to focus more on its core and
higher growth areas (including Central and Eastern Europe and
Southeast Asia). We are positive on the potential deal.
We note that Actavis is not the only company focusing on its core
assets and divesting (or planning to divest) its non-core assets
to drive growth. Several other big pharma companies have either
divested or entered into agreements to divest their non core
assets. For example,
) divested several non-core brands from its Consumer Healthcare
Johnson & Johnson
) recently received a binding offer for its Ortho-Clinical
Diagnostics (OCD) business.
In the near term, we believe that investor focus will remain on
Actavis' release of fourth quarter and full year 2013 results
(Feb 20). Actavis expects fourth quarter 2013 adjusted earnings
to be slightly above the high end of the previously issued
guidance of $2.95-$3.05 per share.
The Zacks Consensus Estimate currently stands at $3.02, well
below the company's guidance. We expect to see significant upward
revisions in earnings estimates for the fourth quarter and full
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Actavis carries a Zacks Rank #1 (Strong Buy). Other stocks which
look attractive at current levels include
). The stock carries the same Zacks Rank as Actavis.