Teva buys unit from Botox maker Allergan

Israeli drugmaker Teva Pharmaceuticals has agreed to buy the generic-drug business of Allergan for about $40.5bn (€36.8bn) in cash and stock, ending its hostile bid for rival Mylan.

The deal does not include Allergan’s anti-wrinkle treatment Botox plant in Westport, Co Mayo, or another manufacturing plant and a European shared-services centre in Dublin.

Allergan employs about 1,000 people across those three operations.

The acquisition extends a wave of mergers that has swept over the healthcare industry. Pharmaceutical deals so far this year have topped $180bn, according to data compiled by Bloomberg, which is on pace to beat last year’s record of over $200bn.

Teva will pay $33.75bn in cash and $6.75bn worth of shares, or about 10% of the enlarged company.

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 drugmaker to extricate itself from an increasingly antagonistic pursuit of Mylan, which is in the midst of trying to buy Perrigo, which has its offices in Dublin.

“We’re looking at a fairly similar deal to the Mylan offer but without all the uncertainties attached to a hostile situation,” said Jonathan Kreizman, an analyst at Bank of Jerusalem. “Teva and Allergan have less overlap than Teva and Mylan.”

Allergan, which makes the blockbuster treatment Botox, said on Sunday it would buy the biotech company Naurex, which is developing a fast-acting antidepressant. The $560m all-cash transaction is expected to close by year-end.

Teva expects its Allergan transaction, which both boards backed unanimously, to close in the first quarter of 2016 and boost earnings per share. Teva had been pursuing a $40.1bn deal to buy Mylan since April, a merger rejected by Mylan management as culturally unfit.

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 backed Mylan’s plan to avoid being taken over by Teva.

Bloomberg reported on July 25 that Allergan was exploring a breakup of the company, including the possible sale of its generics business.

Mylan is 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 $33bn offer.

Mylan will continue its pursuit of Perrigo and expects that Mylan shareholders will vote “in the next several weeks” to support a purchase, it said in a statement.

Bloomberg and ‘Irish Examiner’ staff