Teva Gets FTC OK for $40.5 Billion Acquisition of Allergan’s Generics Business

Teva Pharmaceutical Industries Ltd., has received approval from the US Federal Trade Commission (FTC) for its proposed $40.5 billion acquisition of the generics business of Allergan (i.e, Actavis Generics). The FTC has accepted the proposed consent order, and with the acceptance of the proposed consent order, Teva has satisfied the regulatory approval requirements under the purchase agreement to complete the acquisition of Actavis Generics. The deal is expected to close next week.

In issuing a statement on giving its okay for the deal, the FTC noted that Teva is being required to divest nearly 80 products. Some of those divestments by Teva, as earlier announced by the company include: the the sale of a portfolio of US generic products for $652 million to Mayne Pharma, an Australian pharmaceutical company; the sale of five abbreviated new drug applications (ANDAs) in the US to Sagent Pharmaceuticals for $40 million; and the sale of eight ANDAs to Dr. Reddy’s Laboratories for $350 million.

In its ruling, the FTC noted that Teva is currently the largest generic drug company in the United States, with an overall generic market share of approximately 13%; Allergan is third, accounting for approximately 9% of generic sales.”Although this merger combines two large sellers of generic drugs, the generic pharmaceutical industry as a whole remains relatively unconcentrated,” said the FTC. “Over two hundred firms sell generic drugs in the United States and the five largest suppliers account only for about half of overall generic sales. Following this transaction, the combined firm will likely have a 22% share of industry-wide sales across all generic product markets.”

Once the transaction is completed, Teva will have approximately 338 product registrations pending US Food and Drug Administration approval and will have approximately 115 pending abbreviated new drug applications in the US. Additionally, Teva will have a commercial presence across 80 markets, including a top-three leadership position in over 40 markets, according to the company.

The transaction is expected to achieve $1.4 billion in operational and tax synergies achievable by the end of 2019. The combined company is expected to generate more than $25 billion of free cash flow from deal close to the end of 2019.

Teva announced its acquisition of the generics business of Allergan in November 2015. The sale of its generics business to Teva positions Allergan as a pure-play specialty pharmaceutical companies. The transformational deal for Allergan was Actavis’ $70.5 billion acquisition of Allergan, which closed in March 2015 (Actavis then took Allergan as it corporate name), which followed Actavis' $28 billion acquisition of Forest Laboratories in 2014, two large-scale acquisitions strengthening then Actavis’ specialty pharmaceutical portfolio. Teva pursued the generics business of Allergann following an unsuccessful effort to acquire Mylan in 2015.

Source: Teva Pharmaceutical Industries and FTC

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