Warner Chilcott Confirms $3.1 Billion Buy Of P&G Drug Unit

   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; [e-mail]