London - Israeli drugmaker Teva Pharmaceuticals Industries Ltd agreed to buy the generic-drug business of Allergan for about $40.5 billion in cash and stock, and ended its hostile bid for rival Mylan NV.
Teva will pay $33.75 billion in cash and an amount in shares valued at $6.75 billion today, representing an estimated under 10 percent ownership stake in the enlarged company, Teva said in a statement.
The deal 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. It also allows the Petach Tikva, Israel-based pharmaceutical company to extricate itself from an increasingly antagonistic pursuit of Mylan, which itself is seeking to buy Perrigo.
The acquisition extends a wave of mergers that has swept over the health-care industry. Announced pharmaceutical deals so far this year have topped $180 billion, according to data compiled by Bloomberg. That’s on pace to beat last year’s record of more than $200 billion.
Allergan, which makes the blockbuster wrinkle treatment Botox, said Sunday it would buy the biotech company Naurex, which is developing a fast-acting antidepressant. The $560 million all-cash transaction is expected to close by year-end.
Bitter conflict
Teva had been pursuing a $40.1 billion deal to buy Mylan since April and solidify its role as the industry leader. Mylan rejected Teva’s advances. Last week, Mylan’s independent foundation exercised an option to acquire shares that let it control half of the company in a move that rendered Teva’s attempt to win over a majority of its shareholders much more difficult. Abbott Laboratories, Mylan’s top shareholder, in June said it also backed Mylan’s plan to avoid being taken over by Teva.
Mylan is itself pursuing Dublin-based Perrigo, a campaign that may now get fresh impetus as pressure mounts to become bigger. Perrigo, which makes prescription and over-the-counter drugs, has thus far rebuffed Mylan’s $33 billion offer.
Barclays and Greenhill & Company are serving as financial advisors to Teva. Sullivan & Cromwell LLP and Tulchinsky Stern Marciano Cohen Levitski & Company are its legal counsel.
Allergan, based in Dublin and with operating headquarters in Parsippany, New Jersey, is itself the product of a recent merger. Actavis Plc agreed to buy Allergan for $66 billion in November 2014, after spending months locked in bitter conflict with Valeant Pharmaceuticals International, a rival drugmaker that had started a hostile takeover effort that year. The deal was completed in March.
Last month, Actavis rebranded the combined company as Allergan. The combination created a health-care giant with projected annual sales of more than $20 billion this year. The generics business generated sales of $6.75 billion last year. Teva’s current head of generics, Siggi Olafsson, is a former Actavis executive.
* With assistance from David Wainer in Tel Aviv
Bloomberg