Watson Pharmaceuticals to acquire Arrow Group for $1.75 billion

17 June 2009

Watson Pharmaceuticals, the second largest maker of generic drugs in the US, will expand its global commercial footprint by acquiring privately held and smaller generic drug maker Arrow Group for $1.75 billion in cash and stock.

The transaction price will include a cash payment of $1.05 billion, and an issue of 16.9 million shares of Watson common stock valued at $500 million based on Watson's trailing 5-day average stock price of $29.51, both paid at closing.

The combination of Watson and Arrow will result in a global pharmaceutical company with over $3 billion in revenue, commercial operations in over 20 countries, and a robust product portfolio and pipeline.

Watson said that the remaining $200 million will be paid in the form of zero-coupon preferred stock redeemable three years after closing of the transaction. Arrow shareholders will also receive additional contingent payments based on sales of the authorised generic version of Pfizer's Lipitor.

Founded in 2000, Arrow Group is a global generic pharmaceutical company with commercial operations in over 20 countries and has approximately 1,000 employees worldwide, including more than 250 in R&D.

Arrow's geographic reach comprises a mix of established, growing and emerging markets worldwide. The company operates as Arrow Generics in the United Kingdom, as Cobalt Pharmaceuticals in the US and Canada and as Arrow Generiques in France.

Arrow also manages strategically located production facilities in Brazil, Canada and Malta, and employs 250 at its Australia-based R&D facility.