Allergan (AGN) Sells Generics Unit to Teva for $40.5 Billion
  PUBLISHED ON: Jul 27, 2015

Shares of Allergan plc (AGN) were trading up +17.29 or +5.61 percent to $325.50 per share in Monday's premarket after news that the company will be selling its generic pharmaceutical unit to Teva Pharmaceuticals Industries Ltd. (TEVA) for $40.5 billion. Allergan plc stock closed at $308.21, down -6.74 or -2.14 percent in Friday's regular trading session.



Formerly known as Actavis Plc, Dublin, Ireland based Allergan plc has their administrative headquarters in Parsippany-Troy Hills, New Jersey.
The company is a transnational pharmaceutical company specializing in the development, manufacture and commercialization of generic and over the counter medications. The company operates in 100 countries with 40 manufacturing facilities and 27 global marketing and sales and research and development centers. Allergan employs over 30,000 people and changed its name from Actavis after acquiring Allergan in March of 2015 for $70.5 billion.

Founded in 1901, Petah Tikva, Israel based Teva Pharmaceutical Industries Ltd. is the largest generic drug manufacturer in the world by sales and in the top 15 drug manufacturers worldwide. The company operates facilities in North and South America, Europe and Israel and employs over 45,000 people. The company's stock is listed both on the New York Stock Exchange and the Tel Aviv Stock Exchange.

The announcement early this morning, had Teva Pharmaceutical sign a definitive agreement with Allergan plc for the acquisition of the Allergan Generics unit for a total of $40.5 billion. Upon the close of the transaction, Allergan will receive $33.75 billion in cash and Teva shares valued at $6.75 billion, which would give Allergan shareholders just under a 10 percent ownership stake of Teva.

The number of Teva shares will be determined based on the stock's volume weighted average trading price over the 15 days prior to the announcement of the deal and five days after the announcement. The deal was unanimously approved by the board of directors of both companies and is expected to close in the first quarter of 2016.

Erez Vigodman, President and Chief Executive Officer of Teva noted in the company's press release that, "This transaction delivers on Teva's strategic objectives in both generics and specialty. Through our acquisition of Allergan Generics, we will establish a strong foundation for long-term, sustainable growth, anchored by leading generics capabilities and a world-class late-stage pipeline that will accelerate our ability to build an exceptional portfolio of products - both in generics and specialty as well as the intersection of the two.

The sale of the Allergan unit will effectively end Teva's hostile $43 billion bid for Dutch generics company, Mylan (MYL), which Teva announced in a separate statement. Mylan, for its part congratulated Teva in its own press release and reaffirmed its commitment to the acquisition of rival Perrigo Company (PRGO). Perrigo has so far resisted Mylan's takeover attempts.

The stocks of both companies are up sharply in this morning's premarket, with Teva shares up more than 15 percent and Allergan shares up almost nine percent. Allergan shares have sold off somewhat since the announcement, having been up over eight percent earlier.

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Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2015. Content published with author's permission.

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