Watson Signs Agreement to Divest Equity Interest in ScinoPharm
Watson Pharmaceuticals, Inc. today announced that it signed an agreement on February 26, 2010 to divest its equity ownership position of approximately 31% of ScinoPharm Taiwan Ltd. The transaction is subject to the parties obtaining approvals from various government agencies in Taiwan, as well as other customary closing conditions. Assuming all closing conditions are met, Watson expects the transaction to close during the first half of 2010. Under the terms of the stock purchase agreement, Watson will sell its entire holdings for net proceeds of approximately $94.0 million. The Company said that it intends to utilize the proceeds to enhance its financial ability to execute future strategic business development initiatives, as well as support other general business purposes.
"Watson's relationship with ScinoPharm has been long and beneficial. However, as we refocused our global business and increased our own active pharmaceutical ingredient (API) development and manufacturing capabilities, this relationship has become less strategic for our long-term growth," said Paul Bisaro, President and Chief Executive Officer of Watson.
Watson acquired an initial equity interest in ScinoPharm in 2004 as part of its initiative to increase access to sources of unique APIs. In 2005 and 2006 Watson increased its investment, ultimately resulting in ownership of approximately 31% of ScinoPharm. The Company has previously accounted for its return on this investment as part of its earnings on equity investments disclosures.