Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) is set to buy the generics unit of Allergan plc (NYSE: AGN) in a deal worth about $45 billion, the "Wall Street Journal" reports. Sources familiar with the matter told the newspaper that the deal could be completed by tomorrow.
The Israeli pharmaceutical company is already the world's biggest generic pharmaceutical maker but it is determined to consolidate its position in the market with a major acquisition. For the past few months, Teva has been pursuing a hostile takeover bid for Mylan N.V. for more than $40 billion. The purchase of Allergan's generic business would almost certainly mean the end of Teva's interest in Mylan, which last week invoked a "poison pill" to avert the takeover, when the Dutch fund Stichting exercised its call option to temporarily takeover Mylan and protect it from being bought.
Allergan was acquired a few months ago by Actavis plc, in a $70.5 billion deal that created a huge drugs company traded on Wall Street under the name Allergan with a market cap of some $120 billion.
The "Wall Street Journal" report is in line with other reports in the foreign press and media in the past few days according to which Allergan is examining the possibility of spinning off its generic drugs division and focusing on original drugs.
For Teva, buying Allergan's generic division will give it what it sought in its bid for Mylan: raising its market share in the hot area of generic drugs and an opportunity to make further cost cuts to enable it to cope with lower margins on cheap drugs.
If the Allergan unit is spun off and merged with Teva, then Mylan's $35 billion takeover bid for Perrigo Company (NYSE:PRGO; TASE:PRGO) could go ahead as the industry continues to be shaken up by huge mergers and acquisitions.
Published by Globes [online], Israel business news - www.globes-online.com - on July 26, 2015
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