updated 6/30/2006 9:46:45 AM ET 2006-06-30T13:46:45

Barr Pharmaceuticals Inc. raised its buyout offer Friday for Croatian generic drug maker Pliva d.d. to $2.3 billion, topping an improved offer from Iceland’s Actavis Group HF.

Barr said it would pay Pliva shareholders 743 kuna ($129.05) a share, as well as a 12 kuna ($2.08) dividend, for a total cash consideration of 755 kuna ($131.14) per share.

Actavis Group HF said Thursday it had submitted a better offer for Pliva before the company announced that it had accepted a previous $2.2 billion cash takeover offer from Woodcliff Lake, N.J.-based Barr.

Actavis said its offer was submitted Monday. On Tuesday, Barr and Pliva, one of the largest drugmakers in Central and Eastern Europe, announced that Barr’s bid had been chosen over an earlier Actavis offer.

Activa Group HF’s most recent offer is 735 kuna ($127.66) a share, including a 12 kuna dividend. The company said Friday it bought 9.7 percent of Pliva’s shares in the last two days, with a call option on an additional 10.7 percent of shares outstanding.

“As we stated when our initial offer was announced, we believe that Barr represents the best potential suitor for Pliva and provides significant value to Pliva’s shareholders,” Bruce L. Downey, Barr’s chairman and chief executive said in a statement.

On Tuesday, Downey told analysts in a conference that he had no reason to believe that the endorsement by Pliva’s supervisory board “isn’t the final word.”

Barr and Actavis have been the front-runners in a bidding war that began when Actavis unexpectedly approached Pliva with an offer that valued the company at $1.6 billion. Actavis later raised its price after Pliva rebuffed the approach.

“The decision to increase the offer price follows Actavis’ due diligence review which identified greater potential synergies than previously anticipated,” Actavis said in a statement.

Actavis said its combination with Pliva would create the third-largest maker of generic drugs in the world.

The Croatian government, which holds about 17 percent of Pliva’s shares, indirectly supported the Barr deal on Tuesday, saying it “welcomes” the increased price of the shares. It still asked “the future new owner” to keep the company’s headquarters and production units in Zagreb.

Downey said Tuesday Barr will maintain Pliva’s base in Zagreb, and intends to retain senior management. Barr has about 2,000 employees, while Pliva has 6,000, including some in East Hanover, N.J.

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