Teva, Allergan Tweak Acquisition Agreement
July 13 2016 - 9:31AM
Dow Jones News
By Brittney Laryea
Teva Pharmaceutical Industries Ltd. and Allergan PLC on
Wednesday said they had tweaked the terms of Teva's purchase of
Allergan's generics business, including pushing back a key date
that illustrates how long the deal is taking to close.
The companies said they had moved back the date at which either
company could back out of the agreement, under certain
circumstances, to Oct. 26 from July 26 -- which is a year after the
deal was struck. When the deal was originally announced, the
companies said they expected the deal to close in the first quarter
of this year.
The companies also excluded two generic drugs, Actonel and
Carafate, from the agreement and reduced the cash consideration for
the deal, whose original price tag was $40.5 billion, by $221
million because of the move. In the latest quarter, Allergan's
Carafate sales were $61 million, up 14% from a year earlier. The
company didn't break out sales of Actonel in its latest quarterly
report.
Israeli-based Teva entered the cash-and-stock agreement to buy
Allergan's generics unit in July 2015. The deal combines Teva, the
world's largest generic-drug company by sales, with the
third-largest competitor in the market. It included $33.75 billion
in cash and Teva shares valued at $6.75 billion.
The acquisition would enter Teva into the top ranks of global
drugmakers and give the company increased scale in an increasingly
competitive generic-drug market. Teva would also reduce costs,
helping with a wave of big patent expirations.
Allergan will get some cash to pay down its debts and the
ability to focus on the more profitable name-brand drugs. Formerly
Actavis, Allergan changed its name in 2015 after completing deals
totaling about $100 million that gave it band-name drugs like
Botox.
Midsize companies such as Teva have largely driven the breakneck
pace of consolidation in the drug industry in recent years -- part
of a broader boom in mergers and acquisitions. Meanwhile, bigger,
better-established rivals have largely been on the sidelines of
major deal making.
In March, Teva said its Allergan acquisition would close later
than originally expected, possibly delayed by tougher-than-expected
negotiations with regulators and indicating a possible need for
more divestitures. The delay meant that Teva missed the initial May
2 launch of Allergan's generic drug Crestor, shifting 11 cents in
per-share earnings to the smaller company.
Shares of Teva rose 2.4% premarket, while Allergan shares edged
down 0.3%.
Write to Brittney Laryea at brittney.laryea @wsj.com
(END) Dow Jones Newswires
July 13, 2016 09:16 ET (13:16 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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