Forest Labs to Be Bought Out

The big merger news this morning is that Actavis is going to buy Forest Labs ($FRX) for $25 billion. The cash-and-stock deal is for $89.48 per share which is a 25% premium over FRX’s close on Friday.

Forest Labs is notable because it’s been one of the best performing stocks for many years. I should warn you that this long-term data isn’t always reliable but according to the charts at Google Finance, FRX was going for 2.7 cents per share in early 1978. That works out to a 330,000% gain over 36 years. That’s more than 25% per year.

I trust the data from Yahoo Finance a little more but it doesn’t go back as far. Yahoo has FRX going for as little as $1.01 per share in May 1988. That adjusts for four 2-for-1 splits.

The shares had hit a peak of $78 in 2004 and had gradually fallen down to $18 by March 2009. As late as November 2012, FRX was going for less than $32 per share.

It’s odd how a company can watch a stock plunge 76% and then see it rebound by 289% — and then decide to buy it for a 25% premium.

Posted by on February 18th, 2014 at 9:12 am


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