Shares of Irish drugmaker Warner Chilcott wcrx jumped more than 25% Monday on news it will more than triple its revenue and dramatically expand its product lines by buying Procter & Gamble's prescription drug business for $3.1 billion.
Warner Chilcott, which specializes in women's health and dermatology products, will get a portfolio with $2.3 billion in annual sales, boost its offerings in women's health with a blockbuster osteoporosis treatment and get a toehold in the urology and gastroenterology markets.
The deal also brings the Irish company an unspecified number of Procter and Gamble's pg prescription drugs in development and manufacturing facilities in Puerto Rico and Germany.
Just the top drug that Warner Chilcott gets in the deal, Actonel for osteoporosis, with more than $1 billion in annual sales, exceeds the company's 2008 revenue of $938 million. Warner Chilcott also gains colitis drug Asacol HD, bone drug Didronel and Enablex for overactive bladder.
"The acquisition of the P&G pharmaceutical brands and employee talent is a transformational, strategic move for us," said Roger Boissonneault, Warner Chilcott's president and chief executive.
Warner Chilcott's products include some well-known oral contraceptives — Loestrin 24 FE, Femcon FE and Ovcon — plus multiple treatments for women's health issues.
P&G last month sold Japanese market rights for its osteoporosis treatment to Ajinomoto for $210 million.
The purchase expands Warner Chilcott's business into 14 new countries. Tom Millikin, spokesman for P&G's pharma business, said about 85% of the 2,300 employees in that business will transfer to Warner Chilcott.
"These types of transactions tend to be positive in the short term for acquiring companies, so (Warner Chilcott) may see an initial pop" in stock price, analyst Les Funtleyder at Miller Tabak wrote to investors. He added that the company "will have to execute well in order to see longer-term returns."
Warner Chilcott said it will borrow money from a group of banks to complete the deal, which is expected to close by year-end.
Procter & Gamble said the sale will result in a one-time gain of $1.4 billion, or about 44 cents a share. Lost profit from the business and other costs will cancel out 10 to 12 cents a share. The company expects the sale to lower its profit in future years by 16 to 18 cents a share.
In the last year, Procter & Gamble has sold off other business including Folgers coffee and Noxzema skin care brand.
AP Business Writers Marley Seaman in New York and Dan Sewell in Cincinnati contributed to this report.