IRELAND-BASED drugmaker Actavis PLC plans to buy Forest Laboratories Inc in an approximately US$25 billion cash-and-stock combination that will create a pharmaceutical company with a product portfolio that includes drugs like the Alzheimer’s disease treatment Namenda.

Actavis said that it will pay Forest shareholders US$26.04 in cash and a portion of an Actavis share for each Forest share yesterday. The total, per-share price of US$89.48 represents a premium of about 25 per cent over Forest’s closing price Friday of US$71.39.

Shares of New York-based Forest shot up 35 per cent to US$96 in pre-market trading, above the price Actavis offered. That’s a sign that shareholders believe Forest will receive a better offer. US-traded shares of Dublin-based Actavis climbed 12 per cent, or US$23.35, to US$215.25.

Actavis was formed in 2012 through a US$5.6 billion

tie-up between generic drugmaker Watson Pharmaceuticals and Actavis Group. It has grown rapidly through acquisitions, including a US$8.5 billion deal it closed last fall to buy another Irish drugmaker, Warner Chilcott.

New York-based Forest Labs has been squeezed by generic competition to some of its biggest drugs, including its anxiety and depression drug Lexapro. It also faces the loss of patent protection for Namenda in 2015. The company has launched several new drugs, including the depressive disorder treatment Viibryd and lung disease drug Daliresp, to help make up for those losses.

Forest took an annual loss in fiscal 2012, its first in 15 years, and has faced pressure from billionaire investor Carl Icahn, its second-largest shareholder, according to FactSet.

The company has been working to cut costs under new CEO Brent Saunders, who replaced long-standing leader Howard Solomon last fall. The new leader, backed by Icahn, launched plans to cut about 500 jobs as part of a goal to trim US$500 million in costs.

Tuesday’s announcement comes a few weeks after Forest completed its own acquisition, a US$2.9 billion purchase of Aptalis, a company that makes treatments for gastrointestinal problems and cystic fibrosis.