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Forest Raises $1.8 Billion in Bond Sale to Fund Aptalis Takeover

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Jan. 27 (Bloomberg) -- Forest Laboratories Inc., the maker of the Alzheimer’s drug Namenda, raised $1.8 billion with a two-part bond offering to fund the takeover of Aptalis Pharma, more than doubling its debt.

Forest sold $1.05 billion of 4.375 percent notes due in five years to yield 277 basis points more than similar-maturity Treasuries and $750 million of 4.875 percent bonds maturing in 2021 to yield 267 basis points more than benchmarks, according to data compiled by Bloomberg. Standard & Poor’s rates the New York-based company BB+.

Its shares have rallied 11 percent since Forest announced the $2.9 billion takeover Jan. 8. The company is seeking new products after the loss of patent protection for its former top-seller, the antidepressant Lexapro. It’s the first buyout at Forest for Chief Executive Officer Brent Saunders, who took over Oct. 1 after proxy battles between the company and billionaire investor Carl Icahn, who gained a board seat in 2012.

The offering more than doubles the company’s $1.2 billion of debt. Its 5 percent securities due December 2021 were quoted at 101.4 cents on the dollar Jan. 24, Bloomberg prices show.

The pharmaceutical industry has been struggling to replace revenue lost to generic-drug competitors as patents expired in recent years for medicines including Pfizer Inc.’s Lipitor and Bristol-Myers Squibb Co.’s Singulair. More than $60 billion was lost to generics from 2010 to 2012, according to research by analysts at Bloomberg Industries.

Forest shares climbed 0.3 percent to $65.14 in New York trading.

To contact the reporter on this story: Matt Robinson in New York at mrobinson55@bloomberg.net

To contact the editor responsible for this story: Shannon D. Harrington at sharrington6@bloomberg.net

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