News
Email
Print
Teva says it will buy Barr, a rival in generic drugs
ADVERTISEMENT
Published: July 19, 2008
TRENTON, N.J. - In the latest drug consolidation, Teva Pharmaceutical said yesterday that it would buy rival generic drug-maker Barr Pharmaceuticals for nearly $7.5 billion in a move that will boost Teva's dominance as the world's biggest generic drug-maker.
The deal continues a wave of consolidation among generic drug-makers, driven in part by expected growth in the industry from impending brand-name patent expirations worth billions of dollars a year.
Teva Pharmaceutical Industries Ltd., based in Israel, said that acquiring Barr Pharmaceuticals Inc., based in Montvale, N.J., the world's No. 4 maker of generic drugs, will also expand its presence in the United States and other key markets, from Russia to Eastern and Central Europe.
Analysts called the deal a great combination for both companies, and Barr shares jumped by double digits on the news.
"This was the 12th attempt to acquire Barr, and the third by Teva," Barr's chief executive, Bruce Downey, told analysts during a conference call. "This is the right price, the right time and the right opportunity."
Barr shareholders will receive $39.90 in cash and 0.6272 of a Teva American Depositary Receipt for each share they own, a total of $66.50 a share. Teva also is offering to assume $1.5 billion of Barr's debt.
Barr shares finished at $46.82 Wednesday, before reports that a deal was in the works sent the stock up 22 percent.
The deal is expected to close at the end of this year. Teva said that it should bring $300 million in annual savings within three years and add to profits within a year.
Shlomo Yanai, Teva's chief executive, said that the two companies have minimal overlap in products and that Barr would add to his company's products and research pipeline, particularly in women's health.
"I cannot imagine a company that could be a better fit with Teva, our business, our people, our values," Yanai said.
The deal is part of a trend of globalization over the last five years, with U.S. and foreign makers of generic drugs expanding into each others' territory through increased marketing, new products or acquisitions, said Doug Long, a generics analyst at IMS Health, a health-data company.
Reasons include governments and other payers turning to lower-price generics, expansion of their market into new countries and major brand-name drugs losing patent protection. Drugs with sales exceeding $54 billion a year are set to lose patent protection from 2008 through 2012, according to prescription-benefit manager Medco Health Solutions.
Last year, Teva reported $9.4 billion in sales, while Barr posted $2.5 billion.
The largest maker of oral contraceptives in the United States, Barr sells generic versions of Yasmin and many other popular contraceptives. It also sells 27 brand-name drugs, including contraceptive Seasonique, which limits menstrual periods to four times a year, and the Plan B emergency contraceptive.
Teva sells a new, brand-name multiple-sclerosis drug, Copaxone, and is developing experimental drugs for other neurological diseases, cancer, and immune and inflammatory disorders.
Together, the two companies have more than 500 products on the market, and more than 200 applications pending in the United States to sell generic versions of brand-name drugs with $120 billion in annual sales.
The combined company will have about 37,000 employees in more than 60 countries.
Downey told analysts that he plans to stay on through the transition and help with integration after the deal closes, but then will leave.
Yanai said he is still trying to convince Downey to stay on in some role.
The boards of both companies unanimously approved the deal. Approval is needed from Barr stockholders, the Federal Trade Commission and other regulators.
Barr stock was up $6.45, or 11.3 percent, at $63.62 in afternoon trading. Teva's ADRs rose $3.44, or 8.4 percent, to $44.49.
Email
Print
ADVERTISEMENT
N.C. Politics
Federal Politics
Advertisement
