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U.S. drug maker buys European rival

/ Source: The Associated Press

Pliva d.d., one of the largest drug makers in Central and Eastern Europe, said Tuesday it had accepted a $2.2 billion cash takeover offer from U.S.-based Barr Pharmaceuticals Inc. that tops the last public bid by Actavis Group HF.

Barr offered $122.04 per share for Zagreb, Croatia-based Pliva, which said the figure represents a 38 percent premium to its closing share price on March 16, the last business day before Pliva said it had received a proposal from Actavis. Pliva managers were publicly against Actavis’ offers, judging them too small.

“Barr is an ideal partner for future growth in this consolidating industry and an excellent strategic fit with Pliva, which we believe will strongly contribute to the global competitiveness of the new Barr Group,” said Pliva CEO Zeljko Covic.

Woodcliff Lake, N.J.-based Barr said it will launch the offer to Pliva shareholders this year after receiving regulatory approvals. Barr’s offer is conditional upon its receiving more than 50 percent of Pliva shares.

“It gives us an opportunity to transform the company that we’ve built for the last 12 years in the United States into a truly international company,” Barr Chairman and CEO Bruce L. Downey told analysts in a conference call Tuesday morning.

“The acquisition here will give us over $600 million in sales in Europe and a presence in 30 countries,” including Russia, Germany, Italy, Spain and the United Kingdom, Downey said.

Downey said the combined company would have nearly $2.5 billion in sales and net income of more than $550 million.

The purchase will be financed with cash and new debt of about $2 billion, Barr said.

The acquisition will help Barr lower its manufacturing and product development costs, he said, while yielding tax savings estimated at $50 million in fiscal 2008.

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

Barr and Iceland-based Actavis were the front-runners in the bidding war, which 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.

Actavis representatives did not immediately return a call for comment.

Barr and Pliva had been working together since March 2005 on the development of a generic version of Amgen Inc.’s Neupogen, which boosts white blood cell production and helps fight infections in cancer patients.

Earlier this year, Pliva sold its research and development center to pharmaceutical maker GlaxoSmithKline PLC in a deal worth up to $50 million.