The delays in completing Teva Pharmaceutical Industries Ltd.'s (NYSE: TEVA; TASE: TEVA) acquisition of Allergan's generic division are affecting the uncertainty concerning the Teva share. The deal, which Teva predicted would be completed in June, has not been completed yet; Teva is still waiting for final approval from the Federal Trade Commission (FTC), which is responsible for antitrust matters.
The Credit Suisse investment bank believes that the deal will be completed soon, and that the key issue for Teva is completing the deal, which will create more certainty, "so that the focus will shift to integration of the acquisition and other possible upside factors for the share." Among other things, in this context Credit Suisse economists cite a positive development in the legal proceedings concerning the patents protecting Copaxone, Teva's ethical drug for treatment of multiple sclerosis.
Credit Suisse recently resumed its coverage of the Teva share with a "Neutral" recommendation. Analysts Vamil Divan and Muriel Chen say that at the current share price (down 8% since May to the current price of $50), they feel more comfortable, but are still waiting for the greater certainty they anticipate after the acquisition is complete, and after Teva publishes its forecasts for the coming years in August-September.
Managed by CEO Erez Vigodman, Teva's current market cap is $45.4 billion.
Teva is acquiring Actavis, Allergan's generic division, for $40.5 billion. As part of completing the deal, it must sell products lines that overlap with the business of the acquired division in order to avoid a negative impact on competition. In recent weeks, several pharmaceutical firms from the US, India, and Australia have announced the acquisition of assets from Teva for an aggregate price of over $1.6 billion.
While the FTC has not yet approved the deal (which is why its completion has been delayed), Teva already received such authorization in Europe four months ago, while undertaking to sell several product lines, most of Actavis's existing generic business in the UK and Ireland, and its generic business in Iceland.
The Bloomberg news agency reported today that India drug company Aurobindo Pharma was competing for the acquisition of Teva's portfolio in the UK, Ireland and Iceland. According to Bloomberg, the Indian company is likely to pay Teva up to $1.5 billion, and is not the only company interested - it was previously reported that private equity funds and pharmaceutical companies Mylan N.V. (Nasdaq: MYL; TASE: MYL) and Novartis were also interested.
Published by Globes [online], Israel business news - www.globes-online.com - on July 5, 2016
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