DOW JONES NEWSWIRES
Specialty drug maker Warner Chilcott Ltd. (WCRX) confirmed that
it will acquire Procter & Gamble Co.'s (PG) prescription-drug
business for $3.1 billion, a sign that the market for loans on more
highly levered deals may be loosening.
The acquisition expands Warner Chilcott's presence in women's
health care and establishes it in the urology market ahead of its
expected introduction of erectile dysfunction treatments.
The deal is expected to close by the end of the year and result
in a one-time gain for P&G of $1.4 billion, or 44 cents a
share. P&G also expects earnings dilution of at least 10 cents
to 12 cents a share because of lost profit and remaining overhead
costs from the unit.
Six banks, led by JPMorgan Chase & Co. (JPM) and Bank of
America Corp. (BAC), are expected to put up as much as $4 billion
in financing for the transaction, The Wall Street Journal reported
Sunday. Roughly $3 billion will go toward the acquisition, with the
remainder refinancing $1 billion in existing Warner Chilcott
debt.
The purchase will be the fourth-largest "leveraged loan" of 2009
in the U.S. and the largest globally for an acquisition, according
to data provided by Dealogic. The last leveraged loan of this size
for a deal in the U.S. was in April 2008, when Mars Inc. announced
its planned purchase of Wrigley. A leveraged loan is typically
defined as a loan made to a borrower with a credit rating below
investment-grade or that already carries a good amount of debt.
Cerberus Capital Management LP and rival drug-maker Forest
Laboratories Inc. (FRX) also were interested in the P&G
business, the Journal reported.
Warner Chilcott and Procter & Gamble shares closed Friday at
$16.06 and $53.58, respectively.
-By Jeffrey McCracken, The Wall Street Journal and Tess Stynes,
Dow Jones Newswires; 212-416-2481; tess.stynes@dowjones.com