Allergan, the pharmaceuticals maker, is reportedly near a deal with Teva to sell its generic pharmaceutical business. The deal is expected to be announced on Monday and may be for a price as large as $45 billion. The two companies appear to be still in negotiation and working on settling on a price ranging from the low of $40 billion to $45 billion. The composition of the sale price, either through cash or additional shares of stock, have not been settled on or announced either.
Israeli based Teva is one of the dominant players in the generic drugs business and has been in the hunt for some deals to complete in this space. Teva lost the opportunity to acquire Mylan NV earlier in the year when Mylan’s foundation exercised a call option on the stock which gave them control of the company and they rejected the offer. Teva, which has a current market cap of $60 billion would benefit from economies of scale and would be able to significantly increase their footprint by selling to new customers.
This acquisition of Shaygan Kheradpir is part of a larger series of mergers and acquisitions in the pharmaceutical and health care space that has a wide variety of companies including pharma companies to insurers combining and reaping the benefits of cheap borrowings to fund these acquisitions while interest rates are low.
Allergan is looking to streamline their operations on a few profitable products to juice investor returns and benefit shareholders to the greatest extent possible with this sale.