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Mergers and Acquisitions

Date: 2016-08-02

Type of information: Company acquisition

Acquired company: Allergan's generic business (Ireland)

Acquiring company: Teva Pharmaceutical Industries (Israel)

Amount: $40.5 billion

Terms:

* On August 2, 2016, Allergan announced that it has completed the divestiture of its global generic pharmaceuticals business to Teva Pharmaceutical Industries. 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 twelve month holding period post-close of the transaction.
Teva has acquired Allergan's legacy Actavis Global Generics business, including the U.S. 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.  Allergan retains its dynamic global branded pharmaceutical business powered by best-in-class products for the central nervous system, eye care, medical aesthetics and dermatology, gastroenterology, women's health, urology and anti-infective therapeutic categories.

* On March 10, 2016, Teva Pharmaceutical Industries announced that it has received regulatory approval from the European Commission for its acquisition of Allergan plc's global generics business. As part of the approval, Teva has agreed to the divestment of certain overlapping molecules in 24 European countries, other than the United Kingdom , Ireland and Iceland . In the United Kingdom and Ireland , Teva will divest a majority of the current Allergan Generic business. As required by the European Commission , the divested business will be capable of manufacturing and marketing generic medicines. The remainder of the Allergan Generics UK/ Ireland business will be integrated with Teva's operations in line with the global transaction. In Iceland , Teva will divest its generic business while retaining the Allergan Generics business.
Teva continues to work closely with the FTC to obtain regulatory approval in the U.S.

* On July 27, 2015, Allergan announced that it has entered into a definitive agreement under which Teva Pharmaceutical Industries Ltd. will acquire Allergan's global generic pharmaceuticals business for $40.5 billion. Allergan will receive $33.75 billion in cash and $6.75 billion in Teva stock. In addition, Allergan retains 50 percent of Teva's future economics from generic lenalidomide (Revlimid®). The transaction has been unanimously approved by the Boards of Directors of Allergan and Teva and is strongly supported by the management teams of both companies. Under the agreement, Teva will acquire Allergan's legacy Actavis global generics business, including the U.S. and international generic commercial units, third-party supplier Medis, global generic manufacturing operations, the global generic R&D unit, the international over-the-counter (OTC) commercial unit (excluding OTC eye care products) and some established international brands. Allergan will retain its dynamic global branded pharmaceutical and medical aesthetic businesses, as well as its biosimilars development programs and the Anda distribution business.

Allergan will receive $33.75 billion in cash and $6.75 billion in Teva stock. The number of shares received will be based on the 20-day volume weighted average price (VWAP) ending Friday, July 31, 2015 and will be subject to a 12-month lock-up. The transaction is expected to have minimal tax leakage of approximately 10 percent with anticipated net cash/equity proceeds of approximately $36 billion which can be deployed to accelerate the company's growth prospects. Allergan expects to have double-digit topline growth, expanding operating margins and strong free cash flow. Allergan expects to use a portion of the sale proceeds to pay down debt, including certain credit facilities and bonds. The transaction is structured to maintain the existing bond issuer and guarantor structure and compliance with bond covenants. Teva will not assume any of the bonds. Allergan remains committed to its investment grade ratings. Beginning with its third quarter earnings report, Allergan will report its generics business as discontinued operations and expects to provide an updated 2015 forecast by mid-to-late September.

The transaction contains customary conditions to closing, including antitrust clearance in the U.S. and the EU and certain other jurisdictions. Following an initial period of 15 business days, there will be no financing contingency related to the transaction. No shareholder vote is required at either Allergan or Teva. The transaction is expected to close in the first quarter of 2016. J.P. Morgan is acting as sole financial advisor to Allergan and Latham & Watkins LLP is serving as Allergan's lead legal advisor.

Details:

Allergan will retain its dynamic global branded pharmaceutical and medical aesthetic businesses, as well as its biosimilars development programs and the Anda distribution business. "This transaction will accelerate Allergan's evolution into a branded Growth Pharma leader, enable a sharpened focus on expanding and enhancing our global branded pharmaceutical business and strengthen our financial position to build on our proven track-record of value creation led by effective capital deployment," said Brent Saunders, CEO and President of Allergan. The group will have a strong position in seven therapeutic areas, including Eye Care, Gastroenterology (GI), Aesthetics, Women's Health, CNS, Urology and Anti-infectives., with a manufacturing network of 12 plants globally, and a mid-to-late-stage R&D pipeline with 70 projects. Allergan will maintain its strong commitment to R&D, with 2015 pro forma investment of approximately $1.4 billion, focused on the development of innovative and durable value-enhancing global products within its brands and biologics portfolios. Allergan has a strong record of successful drug development and currently has more than 70 innovative products in mid-to-late stage development. The Company is also planning to add significant depth across its pipeline this year with the pending acquisitions of: Naurex, a clinical-stage biopharmaceutical company developing therapies utilizing a compelling new mechanism to target areas of significant unmet medical need in Major Depressive Disorder; Merck's small molecule oral calcitonin gene-related peptide (CGRP) receptor antagonists for migraine, an intensely debilitating and immobilizing condition for patients worldwide; Oculeve, which adds novel, complementary dry eye development programs to Allergan's current eye care research and development programs; and Kythera, which immediately enhances Allergan's global facial aesthetics portfolio with the addition of Kybella™ (deoxycholic acid) injection, the first and only approved non-surgical treatment for contouring moderate to severe submental fullness, commonly referred to as double chin.

Related:

Generic drugs

Is general: Yes