Teva Completes $40.5 Billion Acquisition of Allergan’s Generics BusinessBy
Teva Pharmaceutical Industries has completed its $40.5 billion acquisition of the generics business of Allergan. With the closing, Teva has acquired Allergan’s legacy Actavis Global Generics business, including the US and international generic commercial units, third-party supplier Medis, global generic manufacturing operations, and the global generic R&D unit, as well as Allergan’s international over-the-counter (OTC) commercial unit (excluding OTC eye care products) and certain established international brands.
With the acquisition, Teva now has approximately 338 product registrations pending US Food and Drug Administration approval and has approximately 115 pending abbreviated new drug applications for first-to-file in the US. In Europe, after divestitures; Teva will have a pipeline capable of over 5,000 launches across the region. In Teva growth markets including, Asia, Africa, Latin America, Middle East, Russia and CIS, there are now approximately 600 pending product approvals. Overall, Teva is planning for 1,500 generic launches globally in 2017. Overall, Teva has more than 1,800 medicines and 16,000 products with a commercial presence across 80 markets.
Teva expects to achieve cost synergies and tax savings of approximately $1.4 billion annually by the end of 2019, by eliminating duplication and inefficiencies on a global scale and capturing economies of scale.
Allergan has received $33.4 billion in cash and 100.3 million shares of Teva stock valued at $5.4 billion based on the opening price of $53.39 for Teva Pharmaceutical Industries Ltd. shares on August 2, 2016. These shares are subject to a 12-month month holding period post-close of the transaction. With the completion of the Generics divestiture, Allergan plans to commence its previously announced share repurchase program under board authorization of up to $10 billion of the company’s common stock in the coming days. The company expects to execute an initial $5 billion in open market repurchases over the remainder of 2016. If favorable market conditions persist, the company will plan to repurchase the remaining $5 billion under the authorization. The program may be discontinued at any time.
In a separate transaction, Teva Pharmaceutical Industries has agreed to acquire Allergan's Anda Inc., a distributor of generic pharmaceuticals in the US, for $500 million. Anda distributes generic, brand, specialty, and over-the-counter pharmaceutical products from more than 300 manufacturers to retail independent and chain pharmacies, nursing homes, mail order pharmacies, hospitals, clinics and physician offices across the US. For the full year 2016, Anda is expected to generate more than $1 billion in third-party net revenue. As part of the deal, Teva will acquire three distribution centers in Olive Branch, Missouri; Weston, Florida; and Groveport, Ohio, with a total of over 650 employees. The closing of this transaction is subject to antitrust clearance and satisfaction of other conditions. The transaction is expected to close in the second half of 2016.