Forest Labs nears $3 billion deal for Aptalis - source

By Soyoung Kim

(Reuters) - Forest Laboratories Inc (NYS:FRX) is nearing an agreement to acquire specialty pharmaceutical company Aptalis Holdings Inc from private equity firm TPG Capital LP for about $3 billion (1.8 billion pounds), a person familiar with the matter said on Tuesday.

A deal announcement could come as early as Wednesday, the person said, cautioning that negotiations were still being finalized. The source asked not to be identified because the talks are confidential.

Forest and Aptalis did not immediately respond to requests for comment. TPG declined to comment.

Aptalis has a number of drugs that treat cystic fibrosis and gastrointestinal disorders, and sells its products primarily in North America and Europe.

Forest was one of the drug companies that held talks with Aptalis about a possible deal last year as TPG sought an investment exit by riding a wave of dealmaking in specialty pharma, Reuters reported previously, based on people familiar with the matter.

These talks were put on hold when Forest Chief Executive Howard Solomon announced in May that he would retire, according to the sources.

In October, Brenton Saunders, former chief executive of company Bausch & Lomb Holdings Inc, took over as Forest CEO. With top leadership at Forest restored, talks with Aptalis resumed.

TPG was seeking between $3 billion and $4 billion for a sale of Aptalis, the sources previously told Reuters. It had registered the Bridgewater, New Jersey-company for an initial public offering on December 26 in case a deal to sell the company outright did not materialize.

TPG bought Aptalis, formerly known as Axcan Pharma, for $1.3 billion in 2008 and merged it with Eurand Pharmaceuticals in 2011.

Forest had wrangled with billionaire investor Carl Icahn for years and ultimately struck a deal with him last summer that averted a proxy fight. It is still facing patent expirations on several of its biggest drugs, including Namenda, which is prescribed to improve cognitive function in people with Alzheimer's disease.

The patent cliff, and whether Forest can rebuild a strong pipeline of experimental drugs, are issues that investors believe the company may address through acquisitions.

Forest shares have jumped 57 percent in the last 12 months, far outpacing a 23 percent gain for the ARCA Pharmaceutical Index (.DRG), largely on hopes Saunders will buy lucrative new products and maximize sales of existing drugs.

JPMorgan Chase & Co (NYS:JPM) and Evercore Partners Inc (NYS:EVR) are advising TPG on the deal while Morgan Stanley (NYS:MS) is advising Forest.

The Wall Street Journal first reported that Forest is close to a deal for Aptalis earlier on Tuesday.

(Reporting by Soyoung Kim in New York; Editing by Edwina Gibbs and Jeremy Laurence)