Forest spills on Actavis deal details as part of shareholder settlement

Back in February, notorious rebel investor Carl Icahn promoted a Forest ($FRX) deal to sell itself to Actavis ($ACT) as a momentous victory for shareholders. But while investors may have agreed with the principle of a transaction, it turns out not all of them were so happy with the way Forest made the sale--and to whom.

As Forest announced Thursday, it has reached a settlement with shareholders who alleged its board breached its fiduciary duties by consenting to sell the company to Actavis after inadequate consideration, The Wall Street Journal reports. The New York company didn't disclose financial terms of the settlement, but it did agree to make additional disclosures relating to Actavis' $25 billion pickup.

For starters, Forest revealed in an 8-K that, last year, an undisclosed company offered up an all-stock merger that the board turned down. Deal discussions with another followed; after suggesting a partial acquisition of Forest, it later made an all-cash proposal at $70 per share for the whole company that it withdrew early this year.

If a Reuters report from February holds any weight, AstraZeneca ($AZN) could have been among those two would-be suitors. As unnamed sources told the news service, the British drugmaker came to Forest with an offer of around $70 a share late last year--quite a bit less than the $89.48 per share Forest sealed with Actavis' cash-and-stock transaction.

As the Journal notes, speed played a part in the Actavis deal; Forest's board worked under a requirement from the New Jersey company that any merger signoff be negotiated quickly. But in doing so, Forest said, it also weighed the fact that it hadn't had any real takeover interest--except on far less attractive terms.

Forest Laboratories CEO Brent Saunders

"We didn't run a full sales process," Forest CEO Brent Saunders told Bloomberg in February. "This was a situation that came on very quickly as Paul and I got to know each other."

But despite the haste, Forest and Actavis feel they got what they wanted--as does Icahn, who had been agitating for a sale for years. The combined company, which will be led by Saunders, will pair up Actavis' strong generics business with Forest's specialty brands, bringing along opportunities for cost cuts in the process.

- see Forest's 8-K
- get more from the WSJ (sub. req.)

Special Reports: Pharma's top 10 M&A deals of 2013 - Actavis/Warner Chilcott

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