Could Warner Chilcott Plc (WCRX) Receive a Higher Bid?

Could Mylan bid higher?

Actavis has also been an acquisition target from another pharmaceutical firm, Mylan Inc. (NASDAQ:MYL). Mylan had offered to acquire Actavis at around $120 per share, with a total transaction value of around $15 billion. According to Michael Waterhouse, a Morningstar analyst, with the Actavis Inc (NYSE:ACT) acquisition Mylan Inc. (NASDAQ:MYL) could get access to a decent product pipeline and Eastern European markets.

In the first quarter of 2013, Mylan generated around $1.63 billion in revenue, higher than the revenue of $1.58 billion in the first quarter last year. Its adjusted diluted EPS came in at $0.62, a growth of 19% compared to around $0.52 EPS in Q1 2012. In the first quarter, Mylan Inc. (NASDAQ:MYL) has spent around $500 million to purchase around 16.3 million shares from the market. For the full year 2013, Mylan expected to generate around $2.75 to $2.95 adjusted EPS. Mylan Inc. (NASDAQ:MYL) is trading around $31.20 per share, with the total market cap of around $11.9 billion. The market values Mylan at a much cheaper valuation than Actavis, at only 9.4 times EV/EBITDA. Interestingly, Bernstein thought that Mylan could be a potential competitor of Actavis Inc (NYSE:ACT) in the bid for Warner Chilcott Plc (NASDAQ:WCRX), with a higher offering price of around $22 per share.

My Foolish take

Warner Chilcott Plc (NASDAQ:WCRX) seems to be a good fit for both Mylan Inc. (NASDAQ:MYL) and Actavis with its leading market position in gastroenterology and dermatology. However, the offering price made by Actavis Inc (NYSE:ACT) seems to be quite low, at only 6.4 times EV/EBITDA, much lower than the EV multiples of both Actavis and Mylan. Consequently, I would expect a higher bid from other big pharmaceutical companies for Warner Chilcott Plc (NASDAQ:WCRX).

The article Could Warner Chilcott Receive a Higher Bid? originally appeared on Fool.com.

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