Teva Snaps Up Allergan Generics for $40.5 Billion, Ends Pursuit of Mylan

Allergan Considers Breaking Up Into Two Businesses Months After Actavis Merger
July 27, 2015
By Alex Keown, Breaking News Staff

JERUSALEM – Israel-based drugmaker Teva Pharmaceutical is snapping up Allergan Plc’s generic drug business for $40.5 billion, the company announced this morning.

Under terms of the agreement, Allergan will receive $33.75 billion in cash and shares of Teva valued today at $6.75 billion, representing an estimated under 10 percent ownership stake in Teva, the company said. The deal is expected to be finalized in the first quarter of 2016, Teva stated.

“Through our acquisition of Allergan Generics, we will establish a strong foundation for long-term, sustainable growth, anchored by leading generics capabilities and a world-class late-stage pipeline that will accelerate our ability to build an exceptional portfolio of products,” Erez Vigodman, president and chief executive officer of Teva, said in a statement. Vigodman said the drug portfolios of both companies are “highly complimentary.”

“Since the beginning of 2014, we have significantly strengthened the fundamentals of our company, improved generics profitability, solidified our key franchises and put in place robust engines for organic growth, laying the groundwork for transformative transactions such as this one,” Vigodman said.

Teva said the combined strengths of its own generics drugs along with Allergan’s pipeline will make the Israel-based company the world’s largest generics manufacturer, giving the company a stronger toehold in markets across the globe. The company said it expects the combined Allergan and Teva employees to play a crucial role in capturing the “full value” of the transaction. Together, Teva and Allergan Generics will have a commercial presence across 100 markets, including a top three leadership position in over 40 markets, Teva said.

Teva’s stock shot up more than 11 percent this morning following the news of the deal. The stock was trading at $68.71. The combined Teva and Allergan pipeline will create a company with an estimated combined pro forma revenue of $26 billion following the completion of the deal. The combined revenue includes about $11 billion in sales outside the United States.

Teva’s acquisition of Allergan’s generics division ends that company’s dogged pursuit of Mylan Pharmaceuticals, Inc. Earlier this month, Teva reportedly bumped its bid for Mylan to $43 billion, up from $41 billion. Mylan and Teva have been bickering for months over the increasingly hostile takeover of Mylan by Teva, with Mylan saying in a June letter to Teva’s CEO that it considers the company’s stake buying by Teva to be a significant anti-trust issue.

“We consider Teva's stakebuilding as a further indication of its intention to meddle with our business, strategy and mission while remaining unclear as to its actual intentions,” Mylan said in a letter addressed to Teva’s CEO.

Previously Teva acquired 1.35 percent of Mylan NV’s stock in an effort to force the company to accept the already rejected $41 billion bid. After securing the deal with Allergan, Teva said it will review its options on the company’s stake in Mylan, Bloomberg reported.

While Teva has bolstered its position in the generics market, Allergan’s decision to sell comes in the same timeline as anonymous sources saying the company, which newly merged with Actavis Plc, is considering spinning off into separate entities, including the sale of its generics division.

Additionally, the selling of its generics brand came within 24 hours of Allergan announcing it had acquired Naurex, a maker of drugs treating depression and central nervous system ailments for $560 million.

Back to news