Watson to acquire Schein Pharmaceutical in deal worth $674 million

Watson Pharmaceuticals has announced plans to buy its generics rivalSchein Pharmaceutical in a two-step transaction valued at $674 million and which will create a company with combined sales of $1.2 billion. Watson, based in Corona, California, USA, is initially offering $19.50 each in cash for at least 24.5 million of Schein's outstanding shares.

Watson then expects Bayer Corp and certain members of the Schein family, who collectively own 74% of the firm, to tender their shares, meeting the minimum condition of the offer. Once this has been completed, Watson will then acquire all the 8.5 million remaining shares in Schein through a stock merger in which each outstanding share is converted into the "right to receive" a fraction of a share of Watson common stock valued at $23.

Deal "makes great sense"