Oppenheimer Adjusts FRX Estimates Following CLDA Acquisition Announcement

On 2/22, Forest Laboratories, Inc. (NYSE: FRX) announced an agreement to acquire Clinical Data, Inc. (NASDAQ: CLDA) with the transaction expected complete ~2Q11.

“FRX will pay $30.00/sh plus up to $6.00/sh related to Viibryd commercial milestones,” Oppenheimer writes. “At ~2.0x our Viibryd peak sales estimates, we believe this transaction is fairly valued.

“Most importantly, this transaction gives FRX access to Viibryd, a treatment for major depressive disorder (MDD) with a differentiated mechanism of action and side effect profile (lack of sexual side effects), as well as patent protection through 2020, which we believe will penetrate a meaningful portion of the multi-billion dollar anti-depressant market.

“We lower our estimates through 2012 on expected dilution from this transaction and maintain our Perform rating on FRX.”

“We anticipate this transaction will close in 2Q11, will be dilutive by ($0.58) in fiscal 2012, dilutive in 2013, with potential accretion beginning 2014,” Oppenheimer adds. “Our estimates are reduced mainly due to increased SG&A and R&D associated with this acquisition.”

Forest Laboratories closed Tuesday at $32.90; Clinical Data closed at $31.21.