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Original Source: FD (FAIR DISCLOSURE) WIRE
. Patty Eisenhaur, Watson Pharmaceuticals, Inc, Director IR . Dr Allen Chao, Watson Pharmaceuticals, Inc, Chairman & CEO . Charlie Slacik, Watson Pharmaceuticals, Inc, EVP & CFO . Dimi Ntantoulis, UBS, Analyst . Ken Cacciatore, SG Cowen, Analyst . Tom Rice, Andrx Corporation, CEO . Angelo Malahias, Andrx Corporation, President & CFO . David Buck, Buckingham Research Group, Analyst . Randall Stanicky, Goldman Sachs, Analyst . Marc Goodman, Morgan Stanley, Analyst . David Maris, Banc of America Securities, Analyst . Amy Stevens, Susquehanna International Group, Analyst . Michael Tong, Wachovia Securities, Analyst . William Sawyer, Leerink Swann, Analyst
. David Woodburn, Prudential, Analyst . Lei Huang, Lehman Brothers, Analyst
WPI announced on 03/13/06 that it will be acquiring 100% of the common stock of ADRX in an all-cash transaction at a value which approximates $1.9b. For each share of ADRX common stock, ADRX shareholders will receive $25. WPI expects this deal to be accretive to earnings beginning in 2007. The deal is expected to close in 3Q06.
A. Key Data From Call 1. Transaction value = approx. $1.9b.
S1. Transaction Review (A.C.) 1. Overview: 1. WPI announced on 03/13/06 that it will be acquiring Andrx Corp. (ADRX) for an all-cash transaction valued at $25 a share or a total consideration of approx. $1.9b. 2. WPI expects the transaction to be accretive beginning in 2007 or earlier depending on the timing of certain other launches. 3. While the deal is expected to close in 3Q06, it is still subject to regulatory approvals and ADRX's share vote and other customary closing conditions. 4. Strategically, this acquisition is an excellent fit for WPI as it is complementary and maximizing the strength of both organizations. 1. Strengthens WPI's capabilities in sustained-release product technology, development, manufacturing of those products. 2. Expands WPI's current product line. 3. Strengthens the depth of pipeline.
5. Combined co. will have approx. 60 ANDAs in the pipeline. 6. ADRX's distribution unit ANDA will provide financial stability
and solid cash flow to the overall business. 2. Organizational Structure (ADRX): 1. ADRX has three segments to its business:
1. Generic pharmaceuticals. 2. ANDA. 3. Andrx Therapeutics business. 2. ADRX's generic pharmaceutical business currently has 30 ANDAs in the pipeline with several first-to-file opportunities.
3. Current marketed products includes sustained-release products
such as: 1. Cartia XL. 2. Taztia XT. 3. Diltia XT. 4. Metformin ER. 4. Pipeline products including generic:
1. Toprol XL. 2. Cardizem LA. 3. Prilosec. 4. (indiscernible). 5. ANDA is a solid growing business, which will provide consistent, steady growth in revenue and cash flow.
1. Following the close of the transaction, WPI will manage this
business independent from its generic pharmaceutical business.
6. ADRX's therapeutic business has 15 drug delivery technologies.
1. As part of this division, ADRX has an agreement with Takeda
Pharmaceuticals with respect to Actoplus, Metformin XR. 2. Takeda won a district court ruling on the compound patent covering Actos. 1. This patent now will expire sometime in 2011. 3. The NDA for Actoplus, Metformin XR could be filed by late 2006 and could result in a product, which provides solid cash flow in future years.
3. Synergy: 1. WPI expects to see synergy in corporate SG&A.
2. WPI will rationalize its overlapping projects in product
development, but expects this transaction to significantly
strengthen the R&D capability and resources.
S2. Financial Overview (C.S.) 1. Details: 1. WPI will acquire 100% of the common stock of ADRX in an all-cash transaction at a value which approximates $1.9b. 2. For each share of ADRX common stock, ADRX shareholders will receive $25. 3. The transaction is expected to be initially financed with WPI and ADRX cash, together with the new committed bank financing facility of approx. $1.15b. 4. The merger has been unanimously approved by the boards of directors of …