Watson Pharmaceuticals Inc. won U.S. antitrust clearance to buy Andrx Corp. for $1.9 billion, an acquisition that will create the nation's largest maker of generic drugs by sales.
The Federal Trade Commission approved the purchase on condition that Watson, based in Corona, Calif., and Andrx, based in Davie, Fla., divest overlapping products, the agency said Tuesday in a statement. The companies together had $2.69 billion in revenue last year.
Watson agreed in March to pay $25 for each share of Andrx, or 16 percent more than the stock's price at that time. Andrx specializes in copies of controlled-release drugs, such as GlaxoSmithKline's Paxil antidepressant and Schering-Plough Corp.'s Claritin allergy medication.
"Andrx will help Watson in a number of ways," Timothy Chiang, an analyst at FTN Midwest Securities Corp. in New York, said Tuesday in a phone interview. "There are some nice-sized opportunities that Watson could potentially have in 2007."
Watson and Andrx extended the deadline for completing their merger in May, and again in July, to address issues raised by antitrust regulators. With the necessary approval obtained, Watson and Andrx said in a statement Tuesday that they now expect the deal to close Friday.
Teva Pharmaceutical Industries Ltd., based in Petah Tikva, Israel, will take over ownership of Andrx's birth-control pills under the agreement with the U.S. Federal Trade Commission. Watson will also stop distributing oxycodone with ibuprofen for Interpharm Holdings Inc., based in Hauppauge, N.Y.
Also, Andrx will sell pending new generic-drug applications for extended-release glipizide tablets for diabetes and transfer its rights under an existing supply agreement to Iceland's Actavis Group hf.
Watson said in the statement that the marketed products being divested are not considered "material" to the company.
"The divestiture of each product was in line with our expectations," Watson spokeswoman Patty Eisenhaur said Tuesday in a telephone interview. She declined to provide specific sales estimates for these drugs.
Andrx said in September 2005 that it had put applications for U.S. approval of new products on hold after deficiencies were found at a company plant. Chiang said these issues should be resolved by the third quarter of 2007, clearing the way for new generic-drug approvals that may add $90 million to Watson's revenue next year.
Contributing: James Rowley