Bisaro steers Impax to $6.4B Amneal merger, creating fifth-largest U.S. generics company

handshake
Impax and Amneal have agreed to an all-stock deal to create a new company that'll bear Amneal's name.

Surprise, surprise: Impax Labs, looking to bulk up amid generics pricing pressure and newly helmed by M&A specialist Paul Bisaro, has struck a deal.

On Tuesday, the company said it had inked an all-stock pact to merge with Amneal in a transaction that would make it the fifth-largest U.S. generics player. The move will hand Impax shareholders 25% of the new company—which will take Amneal’s name and have an expected value of $6.4 billion, The Wall Street Journal says—while Amneal’s owners will control the rest.

Those Impax shareholders weren’t too thrilled with the news, though: By late morning, they had sent shares down by more than 12%.

And there’s reason to be wary, especially considering how awry the generics’ industry’s last big deal—Teva’s $40.5 billion buyout of Allergan’s generics unit—has gone. With consolidated buyers putting on the pricing squeeze, Teva has had to walk back guidance by $1 billion-plus twice already, and it’s announced 7,000 layoffs and other cost-cutting measures, too.

RELATED: Can ex-Actavis CEO Paul Bisaro work his growth magic at Impax?

Bisaro, though, knows a thing or two about that deal. As CEO of generics heavyweight Actavis, he built up that unit, and after Allergan bought the company, he helped orchestrate the Teva deal from the chairman’s seat.

And he and Amneal are rosy about the new company’s prospects. The way they see it, the combination will pad Impax’s EPS in the first year and generate double-digit revenue growth and adjusted EPS growth over the three years postclose. There’s ample cost-cutting opportunity, too, with the companies expecting to wring out $200 million over that time frame.

RELATED: The top 15 generic drugmakers by 2016 revenue

Plus, the deal will create a more diversified company with “one of the industry's leading high-value generic product pipelines and a growing specialty business,” Bisaro said in a statement; the new company will boast more than 300 candidates in development or already filed with the FDA.

“The transaction is expected to enhance the combined organization's competitive position and allow for continued success in an evolving generics market,” the drugmakers added.

Word of a potential tie-up between the two companies first got out in September, just over four months after Bisaro laid out a new restructuring plan to save $130 million per year.