The New York Times" reports that Israel generic pharmaceuticals company Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA) will announce today that it is acquiring Florida-based company IVAX Corporation (Amex: IVX).
The deal, assuming it goes ahead, will be the largest ever acquisition by an Israeli company, and the second largest in the generic pharmaceuticals market after the acquisition of Eon Labs and Hexal by Novartis earlier this year.
According to The New York Times, Teva will pay $26 for each IVAX share, representing a 14% premium over the market price. The total consideration is $7.5 billion, half in cash and half in shares. Teva will assume $1 billion worth of IVAX's debt.
At its closing price on Friday, IVAX had a market cap of $6.03 billion, while Teva was worth $19.3 billion.
In response to what it described as "market rumors", Teva issued a statement confirming that it was in advanced discussions with IVAX Corporation. "There can be no assurance that this transaction or any other transaction will be consummated. Teva does not intend to make any further comment, or respond to any inquiries, until an agreement, if any, is reached respecting the rights of all parties, or talks have been terminated," the statement said.
IVAX has $1.84 billion revenue in 2004, which means that Teva is paying four times its annual sales. Teva's last large acquisition was in October 2003, when it bought Californian company Sicor for $3.4 billion. The Sicor acquisition was at a sales multiple of 5.5, and several analysts criticized what they said was a high price tag.
"The New York Times" said it was unable to obtain a response from either Teva or IVAX.
Market sources say the report makes sense, in the light of the fact that Teva's customary announcement about the publication date of its quarterly financials has been delayed for several days.
Last February, Swiss company Novartis Pharmaceuticals (NYSE: NVS; LSE: NOV; SWX: NOVZ) acquired German company Hexal and US company Eon Labs for $8.4 billion, thereby becoming the world’s largest generic drug company. It was clear that Teva would not sit idly by while this was happening, and that a large merger on its part was only a matter of time. IVAX was mentioned as a potential candidate to acquire Agis Industries during the course of the negotiations for the acquisition of that company, which ended in Perrigo (Nasdaq: PRGO) acquiring Agis.
Published by Globes [online], Israel business news - www.globes.co.il - on July 25, 2005