In a deal which had been anticipated, Teva Pharmaceutical Industries (NYSE: TEVA) announced it would buy Allergan Generics in a transaction valued at .5 billion.
Advertisement
The deal, the largest in Israel’s corporate history, bolsters Teva’s position as the world’s largest maker of generic drugs, and gives it greater negotiating power with governments and private-health insurers.
Israeli drug maker Teva Prescription Industries Ltd.is within talks to mix with Allergan PLC’s major generic-drug enterprise, in a move that may further consolidation inside the health-care sector and probably mean the end of Teva’s quest for another order. Valeant Pharmaceuticals, which lost out to Actavis, may be interested in acquiring Allergan’s remaining branded-drug business, Finkelstein said. Halfway through the trading day on Monday, Teva shares were up 12%.
Mylan has however fought to stop any attempted takeover – this latest deal has seemingly been a lot smoother for Teva and Allergan, and removes the need for a protracted and hostile deal against Mylan, the pursuit of which had hit Teva’s shares given the ongoing uncertainty. Allergan’s generics had sales of $6.75 billion a year ago.
Teva Chief Executive Erez Vigodman said the combined companies will have proforma revenue of $26 billion and earnings before interest, tax, depreciation and amortisation of $9.5 billion in 2016.
For Allergan, the Teva deal provides it with cash to pay down debt and allows the company to focus more on lucrative brand-name drugs. It expects to achieve cost synergies and tax savings of approximately $US1.4 billion annually, largely achievable by the third anniversary of the closing of the transaction.
Mylan’s proposal not only “substantially undervalues” Perrigo but “does not take into account” the company’s capability to grow through the 2014 acquisition of Belgium-based Omega Pharma, Perrigo Chairman and CEO Joe Papa said in an investor presentation to brokerage analysts in May.
Dublin-based pharmaceutical giant, Allergan PLC, has announced that it is going to purchase Naurex for $560 million in cash.
Teva’s leadership has been saying for months that it believes some of the biggest generic drug companies should combine in order to save money and become more efficient. Allergan climbed 6%. Mylan shares plunged 13.6% to 57.00. An agreement with Allergan would also enable Teva to stop its prolonged efforts to acquire Mylan NV.
Advertisement
Allergan and Teva couldn’t be reach for comment. The results “further demonstrate Teva’s continuous momentum and significantly strengthened fundamentals, improved generics and specialty businesses and ability to drive organic growth”, Vigodman said.
