Watson Plans to Buy Struggling Rival Schein

Generic-drug maker Watson Pharmaceuticals Inc. said it will buy money-losing rival Schein Pharmaceutical Inc. in a two-step deal valued at $674 million as it aims to expand its drug line. Watson, based in Corona, said it will offer $19.50 a share in cash, or $478 million, for at least 24.5 million, or about 74%, of Schein’s outstanding shares. Watson said it expects Bayer Corp. and certain members of the Schein family--who collectively own 74% of the Florham Park, N.J., company’s stock--to tender their shares, meeting the minimum of 24.5 million shares needed for the deal to proceed. Once the tender is complete, Watson said, it would acquire Schein’s remaining shares through a stock merger in which each outstanding share is converted into the right to receive a fraction of a share of Watson common stock valued at $23. In New York Stock Exchange trading, Watson shares fell $7.19 to close at $41.56, while Schein rose $3.38 to close at $20.19.