* Combined entity to be publicly listed
* Deal to close in 1H18
* Impax was expected to keep >25 pct stake - analyst (Adds analysts' comments, background on retail pharmacies; updates shares)
By Divya Grover and Manas Mishra
Oct 17 (Reuters) - Amneal Pharmaceuticals LLC is buying fellow generics drug maker Impax Laboratories Inc in an all-stock deal as a bulwark against a tough drug pricing environment.
The deal comes at a time when speedy approvals of generics by U.S. regulators have ratcheted up competition in the sector, mounting pressure on smaller drugmakers such as Impax, which has a market cap of about $1.48 billion.
Adding to the woes of generics makers, U.S. retail pharmacies including Wal-Mart Stores Inc and Walgreens Boots Alliance Inc are wielding more leverage when buying such drugs, leading to continued price erosion.
"A transaction like this simply had to happen ... in an environment that is likely to continue to be characterized by margin pressure," Piper Jaffray analyst David Amsellem said.
Impax in March had asked Morgan Stanley to help it conduct a strategic review.
Amneal Holdings' members will own 75 percent and Impax shareholders to own 25 percent of the new company's pro forma shares.
"We like Amneal as a better positioned generics asset, but believe Impax was expected to keep more than a 25 percent stake," Susquehanna analysts said.
Impax's shares, which more than doubled in value after the Reuters report, tumbled nearly 16 percent to $16.80 on Tuesday.
Analysts believe the combined entity would have a diverse pipeline and greater exposure to complex dosage forms that have more favorable competitive dynamics.
The deal, which is expected to close in the first half of 2018, would add to Impax's standalone adjusted earnings in the first year, and generate double-digit revenue and earnings growth in the next three years.
"This growth profile is better than what we expect for Teva and Endo International given headwinds facing those businesses in 2018," Cantor Fitzgerald analysts said.
Impax's Paul Bisaro would be CEO of the new publicly listed firm Amneal Pharmaceuticals Inc, which is expected to generate pro forma net revenue of $1.75 billion-$1.85 billion in 2017.
Bisaro, was largely behind transforming a much smaller generic drugmaker Watson Pharmaceuticals, which was at about $2 billion in market cap, into the current version of Allergan with a market valuation of about $80 billion.
J.P. Morgan Securities is Amneal's financial adviser, while Latham & Watkins LLP is its legal adviser.
Morgan Stanley provides financial advice to Impax, while Sullivan & Cromwell LLP is its legal adviser. Impax also received advice from BofA.
Reporting by Manas Mishra and Divya Grover in Bengaluru; Editing by Martina D'Couto