Warner Chilcott Ends Sale Effort, Announces Dividend

Warner Chilcott Plc, a drugmaker specializing in women’s health and dermatology, declined the most in nine months after it ended efforts to find a buyer.

Warner Chilcott fell 6.9 percent to $16.54 at the close of New York trading, its biggest one-day decline since Nov. 9. The drugmaker said in April it was weighing options including a possible sale. Bloomberg News reported the Dublin-based company had received interest from strategic and private-equity buyers.

“Multiple parties expressed what I would describe as bona fide interest in acquiring Warner Chilcott,” said Chief Financial Officer Paul Herendeen, who wasn’t more specific about the possible buyers. “We concluded that this is a better pathway to the creation of long-term shareholder value,” he said on a conference call today.

Warner Chilcott will renew a $250 million share buyback program and expects to pay a special cash dividend of $4, the drugmaker said yesterday in a statement. The drugmaker also repeated its previously announced annual forecast of $3.55 to $3.65 a share and said it expects to begin paying a regular dividend twice a year.

Stalled Attempts

“It seemed clear that the attempts to be bought by someone had stalled,” said James Molloy, an analyst with San Francisco-based ThinkEquity LLC. The drugmaker paid a special $8.50 dividend in 2010, so Molloy said he wasn’t that surprised by the announcement.

“It’s certainly a play they’ve used before,” he said yesterday.

Warner Chilcott will not disclose names or details about groups that expressed interest in buying the company, Herendeen said on the call.

“We continue to actively pursue opportunities to build and improve our company through acquisitions of products, acquisitions of product rights and acquisition of companies,” Herendeen said.

Warner Chilcott expects to fund the special dividend with available cash and $600 million in new debt, the company said in the statement. The company plans to pay out a regular yearly dividend of 50 cents a year in two annual installments, subject to review each year.

Warner Chilcott shares rose 17 percent this year through yesterday.

A group including Thomas H. Lee Partners LP, Bain Capital LLC, and the buyout units of JPMorgan Chase & Co. and Credit Suisse Group AG took the drugmaker private in 2005 for about 1.6 billion pounds ($2.1 billion) and brought it public again in 2006. Credit Suisse sold its stake in 2010.


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