Top Warner Chilcott investors to unload 43M shares

A few months ago, Warner Chilcott ($WCRX) put itself up for sale. Last month, it said "No deal." Now, its top shareholders are conducting a sale of their own, aiming to cash out more than half of their stakes in the company. And after that news broke, other shareholders started unloading, too.

Institutional investors Bain Capital, J.P. Morgan Partners,and Thomas H. Lee Partners--along with current and former top executives--are offering 42.9 million Warner Chilcott shares via a secondary public offering. Bain, JPMP and Thomas H. Lee each own 10.2% of the company, after taking it private in 2005--and then going public again in 2006. When the offering closes next week, they'll hold 4.6% apiece.

The shares will sell at "prevailing market prices," which stood at around $14 yesterday--but about 9% less than that today. And no wonder: That 42.9 million shares accounts for about 15% of the company's outstanding stock. And if its biggest shareholders are selling out, not to mention key executives, then why wouldn't the average Joe?

Even at today's prices, those three institutional investors' take on the sale would top $320 million each. CFO Paul Herendeen, who's selling the biggest chunk of stock among the management group, stands to reap more than $13 million.

The stock offering comes as Warner Chilcott is suffering many of the same problems as its larger rivals. Sales of its bone drug Actonel--once its biggest seller--have dropped, thanks to generic competition. Revenues for this year are expected to drop to $2.54 billion. Regulators have flagged manufacturing problems at its Puerto Rico facility, and its marketing practices are under investigation by the feds. That abandoned sale--which analysts called "an ideal exit" at the time--might look pretty good to the company's board right now.

- see the offering prospectus
- get the release from Warner

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