April 17, 2024

DealBook: Teva to Buy Cephalon for $6.8 Billion

Teva Pharmaceutical Industries said on Monday that it had agreed to buy the biopharmaceutical company Cephalon for $6.8 billion, a deal unanimously approved by the boards of the two companies.

The announcement comes just weeks after Cephalon rejected a $5.7 billion takeover bid from Valeant Pharmaceuticals, calling it too low and opportunistic.

Teva’s cash bid of $81.50 a share is 39 above Cephalon’s share price on March 29, the last trading day before Valeant’s unsolicited offer was announced, and 6 percent above the closing price on Friday.

Teva expects $500 million in annual cost savings from the deal, which it says will be accretive to earnings immediately upon closing. The acquisition will expand Teva’s presence in areas like oncology and the treatment of respiratory diseases, as well as pain management.

The combined company is expected to have $7 billion in sales of branded drugs, as it works to bring to market 30 compounds already in late-stage trials. Cephalon had $2.8 billion in revenue last year.

“Our significantly broader portfolio will permit marketing and sales synergies and enhance profitability,” said Shlomo Yanai, head of Teva, the world’s largest generic drug maker.

Teva bought the German generic drugmaker Ratiopharm last summer for 3.6 billion euros, then worth about $5 billion, as VEM Vermögensverwaltung sold off assets after the suicide of its founder, Adolf Merckle. Mr. Merckle killed himself after losing hundreds of millions of euros in Porsche’s short squeeze on Volkswagen shares in 2008.

Cephalon had bought the Swiss generic drugmaker Mepha earlier in the same liquidation of VEM units, and the deal announced Monday brings the two units once again under the same roof.

Teva, headquartered in Israel, will finance the Cephalon deal using cash reserves, credit lines and bond issuance, the company said. It hired Credit Suisse as its financial adviser and Kirkland Ellis as legal counsel.

Cephalon, based in Frazer, Pa., was advised by Deutsche Bank and Bank of America Merrill Lynch and the law firm Skadden, Arps, Slate, Meagher Flom.

Article source: http://dealbook.nytimes.com/2011/05/02/teva-to-buy-cephalon-for-6-8-billion/?partner=rss&emc=rss

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