Warner Chilcott Buys P&G Drug Unit for $3.1 Billion (WCRX)

Warner Chilcott (WCRX)
Warner Chilcott Buys P&G Drug Unit for $3.1 Billion

Warner Chilcott announced today that it will buy Proctor & Gamble Company’s (PG: Charts, News, Offers) prescription drug business for $3.1 billion. The deal will give Warner Chilcott the rights to such P&G medication offerings as Asacol for ulcerative colitits; Actonel, for osteoporosis; and Enablex, for overactive bladder. In addition, the women’s health care product manufacturer will acquire P&G’s production plants in Puerto Rico and Germany. Assuming all necessary regulatory clearances, both companies expect the deal to be completed by the end of 2009. What does Warner Chilcott see in Proctor & Gamble’s branded pharmaceuticals unit that it is willing to pay such a hefty price tag for it?

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Stock Analysis

Warner Chilcott Limited sees this acquisition as an opportunity to increase the global scale of its business. P&G’s business network will greatly augment the breadth of Warner’s customer scope. Not only does the deal bolster Warner’s drug product offering and manufacturing capability, but it also provides “employee talent”. As part of the terms and conditions of the merger, a large portion of P&G’s pharmaceuticals business workforce is expected to transfer to Warner Chilcott. In addition, Proctor & Gamble Company’s foothold in the urology market will provide excellent synergy for Warner Chilcott’s upcoming erectile dysfunction treatment releases. Warner Chilcott believes that all these added benefits will help take it to the next level.

Warner realizes that a deal of this magnitude will require a very streamlined, efficient transition strategy and a lot of patience. Overall, Warner Chilcott seems very optimistic about the merger, but there is still a lot of work left to be done. Warner was drawn to P&G for its strong synergy alignments, product diversification opportunities, and global market share, but it had to pay a pricey premium in order to acquire them. The verdict is still on out on whether or not this was the best move for the Ireland-based company. However, Warner Chilcott is hoping that it has purchased the right prescription for future success in the women’s healthcare industry.

Warner Chilcott Commentary:
What the $3 Billion P&G Deal Says About the Drug Industry – An analyst’s opinion on why P&G wanted out of the branded drug industry.

Leveraged Loans Making a Comeback? – A breakdown on the financing strategy that Warner Chilcott will implement to pay for its new acquisition.

P&G Sells Drug Unit for $3.1 Billion – A concise recap of the Warner Chilcott’s purchase of Proctor & Gamble’s prescription drug business.

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