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David Bonderman’s TPG Capital Sells Aptalis For $2.9 Billion To Forest Laboratories

The New York Times 2013 DealBook Conference in New York

David Bonderman / Getty

David Bonderman’s giant TPG Capital (formerly Texas Pacific Group) is selling Aptalis, a private company it controls, to pharmaceutical company Forest Laboratories, Inc  FRX (NYSE).

Aptalis is a leading specialty pharmaceutical company focused on gastroenterology and cystic fibrosis. The Company develops and markets a broad line of prescription products to treat a range of these diseases and disorders.
Aptalis is based in New Jersey and has facilities in the US, in Canada and in Europe.

When Forest Laboratories announced the deal earlier today, it said a definitive acquisition agreement has now been signed whereby it will pay US$2.9 billion for Aptalis, subject to regulatory approvals by anti-trust authorities in both the US and Canada, and customary closing conditions. The deal is expected to close within the first half of 2014.

Read More stories about TPG:

Forest Laboratories is a mid sized pharmaceutical company with a market cap currently of about US$18 billion. The company develops, manufactures, and sells branded forms of ethical drug products primarily in the United States and Europe. Forest Laboratories has facilities in the Untied States, Canada, Ireland the UK and France.

The Company holds a portfolio of branded drug products and develops new medicines to treat patients suffering from diseases principally in five therapeutic areas: central nervous system, cardiovascular, gastrointestinal, respiratory, and anti-infective.

Forest Laboratories says it tries to limit risk by acquiring product rights for development and commercialization through licensing and collaborative partnerships. For the same reason it is prepared to acquire companies as well to take advantage of attractive late-stage development and commercial opportunities, where drug development risk is mitigated thereby.

In a little over four years Forest Laboratories shares have more than tripled, and currently stand at US$67 per share, stimulated in the last two years at least to some extent by threatened proxy battles with corporate predator Carl Icahn. Icahn eventually prevailed and imposed his own choice of Brent Sunders as their new CEO. Even so the shares are only roughly where they were ten years ago, so Mr. Icahn’s initiatives may well have been both necessary and helpful.

At September 30th, 2013 Carl Icahn held 11.4% of the shares of Forest Laboratories, though was still not the largest shareholder himself. Institutional shareholder Wellington Management held that honour with a 13.8% position.

Aptalis has built a strong position in the North American and European gastroenterology and cystic fibrosis markets through internal product development and acquisitions of products and companies over the last few years, ” said Frank Verwiel, CEO of Aptalis.

“I’m proud of all that our team has accomplished, and Forest’s acquisition of our company is a testament to the value we have created and the strength of the business we have built. There is a strong business fit between Aptalis and Forest, our strategies are closely aligned, and I am confident that Forest will maximize the opportunity for our products and patients.”

Brent Saunders, Chief Executive Officer and President of Forest Laboratories, Inc. said, “Aptalis is an excellent strategic and financial fit for Forest because of its strong product offerings in two therapeutic franchises that are complementary to Forest – gastroenterology in the U.S. and Canada and cystic fibrosis in Europe.”

“The acquisition of Aptalis helps diversify Forest while advancing our strategy to create blockbuster therapeutic areas, ” he said. With a number of Forest Laboratories patents expiring in upcoming years such product rejuvenation may make good sense.

To help pay for the transaction, which is an all cash deal, Forest Laboratories has secured commitment for a US$1.9 billion bridge loan facility. I am sure Mr. Icahn will approve this latest transaction, which seems like a good fit for everybody.

One imagines that previous ideas for additional stock buy backs may now be put on hold. Indeed the Forest Laboratories may come back again to the equity markets instead if the shares continue to respond well to this new initiative in the weeks ahead – just with this announcement they have already bumped up nearly 15%.

 

About TPG

TPG is a leading global private investment firm founded in 1992 by David Bonderman, James Coulter and William Price.

With over US$55 billion of assets under management, the firm has offices in San Francisco, Fort Worth, Austin, Beijing, Chongqing, Hong Kong, London, Luxembourg, Melbourne, Moscow, Mumbai, New York, Paris, Sao Paulo, Shanghai, Singapore and Tokyo.

TPG has extensive experience with global public and private investments executed through leveraged buyouts, recapitalizations, spinouts, growth investments, joint ventures and restructurings.

 

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