Warner Chilcott In $3 Billion Deal for P&G Drug Unit

NEW YORK (Reuters) – Warner Chilcott Ltd (WCRX.O), a specialty drug maker, is acquiring Procter & Gamble Co (PG.N) prescription drug business for about $3 billion, the Wall Street Journal said on Sunday, citing unnamed sources.

A transaction may be announced as soon as Monday, the newspaper said. The business has about $2 billion of annual sales, it said.

Six lenders led by Bank of America Corp (BAC.N) and JPMorgan Chase & Co (JPM.N) will provide up to $4 billion of financing, including $1 billion to refinance Warner Chilcott debt, it said.

Neither Warner Chilcott nor Procter & Gamble were immediately available for comment.

In December, P&G said it would end new investments in pharmaceuticals, consider divesting its healthcare brands and focus on its health business on over-the-counter products such as Pepto Bismol and Prilosec.

P&G’s prescription drugs include osteoporosis treatment Actonel and overactive bladder treatment Enablex.

P&G hired Goldman Sachs (GS.N) in February to help sell its prescription brands or find other ways to exit the business, sources told Reuters at the time.

In April, P&G Chairman A.G. Lafley said pressure from generic products was one motivation to sell the business.

Last month a source familiar with the situation said P&G was in talks with Warner Chilcott and several private equity firms, including Cerberus Capital Management LP [CBS.UL], to sell the prescription drug business.

Analysts said in July that Warner Chilcott may have an advantage as a bidder since it could squeeze synergies and costs savings out of the acquisition. [ID:nN22326998]

Drugmaker Forest Laboratories Inc (FRX.N) was also interested in the business, the Journal reported.

Warner Chilcott, based in Rockaway, New Jersey, will run the business as a wholly-owned unit, the newspaper said.

The acquisition will be the largest involving a leveraged loan in 2009, the newspaper said, citing data from Dealogic.

It said this suggests more healing in credit markets, and that Warner Chilcott can absorb the banking fees because interest rates remain historically low. (Reporting by Jonathan Stempel and Paritosh Bansal; Editing by Diane Craft)