Teva’s $40.5 bn Allergan acquisition likely to yield substantial returns

Teva Pharmaceuticals has agreed to purchase Allergan’s generics business for $40.5 billion, from which Allergan will receive $33.75 billion in cash and $6.75 billion worth of Teva shares, representing about 10 percent of the Israeli drugmaker


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Under the proposal, Allergan's legacy Actavis global generics business will be spun off and subsequently merged with Teva.

The latter company will also accrue generic manufacturing and research and development units, along with third-party supplier Medis and an over-the-counter commercial unit.

Teva states that, following the addition of Allergan's generics business, it will have approximately 320 pending abbreviated new drug applications in the US, including around 110 first-to-file applications.

Furthermore, the combined company will boast a commercial presence across 100 geographies, including a top-three position in over 40 markets, further cementing Teva's status as a global leader in the generics space.

Mr Gianfranco Zeppetelli, GlobalData's deals analyst, says: "GlobalData's valuation puts Allergan's generics business at approximately $40.3 billion, in line with Teva's final acquisition cost. Teva is therefore well positioned to make a substantial return on investment from the deal, given each company's revenue base and cost synergies. Indeed, Teva believes the purchase will lead to cost synergies and tax savings of approximately $1.4 billion annually.


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