WSJ: Novartis said to eye $16B offer for Actavis

Actavis ($ACT) has suddenly become the belle of the ball. The Wall Street Journal reports that deal talk is heating up, with Novartis ($NVS) said to be entertaining a $16 billion bid for the generics maker. A $13 billion offer from Valeant ($VRX) and a $15 billion bid from Mylan ($MYL) have both fallen flat.

Analysts have said that, among big drugmakers, Novartis has the most to gain from an Actavis buyout. Aegis Capital's Raghuram Selvaraju told Bloomberg last month that adding Actavis to its portfolio "would mean more to Novartis than anyone else" in terms of meeting its ambitions for its generics business. A Novartis spokesman denied that the company had any interest in an Actavis buyout, however.

Novartis's generics unit, Sandoz, brought in $8.7 billion last year; for comparison's sake, Teva Pharmaceutical Industries' ($TEVA) generic sales last year amounted to $10.4 billion. Actavis, created in last year's merger with Watson Pharmaceuticals, had pro forma 2012 sales of about $8 billion.

Novartis itself says it has "no intention" of pursuing an Actavis deal. So the sources talking about Novartis jumping into the bidding may be mistaken, or Novartis, of course, may be keeping its plans close to the vest. The talk itself was enough to boost Actavis shares to $124.13 this morning.

The flurry of talk around a possible Actavis buyout, whoever the potential buyer, just serves to show how ripe for consolidation the generics business is. Expect more talk to swirl until someone actually does step forward with a new Actavis offer--or until Actavis wraps up its own potential $5 billion deal for Warner Chilcott ($WCRX).

- read the WSJ report (sub. req.)

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