Teva’s $40 billion Allergan deal cleared

Teva’s $40 billion acquisition of Allergan’s generics business looks set to close next week, after US antitrust authorities cleared the deal.

It’s a year since Teva made its bid for the slice of Allergan that was formerly known as Actavis, but the deal has been delayed by around six months because of the requirements of the US Federal Trade Commission.

Teva had to divest a range of drugs to comply with the FTC’s requirements, but the deal can now close after the regulator accepted a consent order.

Earlier this month the companies amended the deal slightly so that it could be extended beyond 26 July, a year after the companies signed their agreement.

Teva said the deal when closed will leave it with around 338 generics pending FDA approval, around 115 of which will be potentially ahead of other competitors.

It will create around $1.4 billion in operational and tax savings by the end of 2019, boosting revenues by around 14% next year and 19% in 2019.

It will generate a 9.3% return on invested capital by the end of 2019, Teva said. It is expected to generate $25 billion in free cash to the end of 2019, which Teva can use for acquisition of branded and pipeline drugs, or to expand into growing markets.

Under the terms of the original deal, Allergan was set to receive $33.75 billion in cash and shares in Teva, valued at the time around $6.75 billion.

This represented a 10% stake in Teva, with the final volume of shares decided by an average price around closing.

 

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