Acquisition Strongly Reinforces Teva's
Strategy, Accelerates the Creation of Its New Business Model and
Opens a New Set of Possibilities for the Company In Generics and
Specialty
Opportunity to Further Transform the Global
Generics Space through Best-In-Class Generics Pipeline, R&D
Capabilities, Operational Network, Supply Chain, Global Commercial
Deployment and Infrastructure
Robust Generics Platform to Support Future
Strategic Investment in Specialty
Teva Will Be a Top 10 Global Pharmaceutical
Company
Enhanced Financial Profile with Strong,
Diversified Revenues
Cost Synergies and Tax Savings of Approximately
$1.4 Billion Annually and More Than 20% Accretion in Years Two and
Three Following Close
Teva Pharmaceutical Industries Ltd. (NYSE and TASE:TEVA) today
announced that it has signed a definitive agreement with Allergan
plc (NYSE:AGN) to acquire Allergan Generics in a transaction valued
at $40.5 billion. Upon closing, Allergan will receive $33.75
billion in cash and shares of Teva valued today at $6.75 billion,
representing an estimated under 10% ownership stake in Teva, with
the number of Teva shares determined based on Teva’s volume
weighted average trading prices during the 15 days prior to the
announcement and five days following the announcement. Teva
believes the acquisition will be significantly accretive to
non-GAAP EPS, including expected double-digit non-GAAP EPS
accretion in 2016 and more than 20% accretion in year two and year
three following the close of the transaction. The transaction was
unanimously approved by the Boards of Directors of Teva and
Allergan and is expected to close in the first quarter of 2016.
This strategic acquisition brings together two leading generics
businesses with complementary strengths, brands and cultures,
providing patients with more affordable access to quality
medicines, and creating significant financial benefits for Teva
stockholders. The transaction will create a leader in the INN and
branded generics industry with an overall product portfolio that
leads the industry in terms of differentiation and durability and
offers promising growth opportunities. The new Teva will further
transform the global generics space through its best-in-class
generics pipeline, R&D capabilities, operational network,
supply chain, global commercial deployment and infrastructure to
achieve greater efficiencies across the healthcare system and
provide patients and consumers across the globe with better access
to high quality affordable medicines.
When combined with Teva’s strong generics portfolio, Allergan
Generics’ world-class generics pipeline, which holds a leading
position in first-to-file opportunities in the U.S., will further
enhance Teva’s goals of delivering the highest quality generic
medicines at the most competitive prices and cultivating the best
development pipeline in the industry. The resulting world-class
product portfolio will be complemented by a significantly expanded
and more efficient global footprint, including leadership positions
and strengthened operations, sales and R&D platforms in
attractive markets around the world. In addition, Teva expects to
enhance its financial profile significantly with highly diversified
revenues and profits and to unlock substantial, achievable cost
synergies by eliminating duplication and inefficiencies on a global
scale and capturing economies of scale. The result is a stronger,
more competitive Teva, well positioned to thrive in an evolving
global marketplace and to deliver enhanced value to its
stockholders and other stakeholders.
“This transaction delivers on Teva’s strategic objectives in
both generics and specialty,” said Erez Vigodman, President and CEO
of Teva. “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. Our respective portfolios
of generic medicines and applications are highly complementary,
providing Teva with high quality growth and earnings visibility,
and the scale and resources to expand upon our specialty
capabilities.”
Mr. Vigodman continued, “Given our in-depth knowledge and
understanding of Allergan’s world-class generics business, we are
confident we can realize the projected synergies and accretion
inherent in this acquisition for our stockholders and integrate
Allergan Generics quickly into Teva. With pro forma revenues of
approximately $26 billion and combined EBITDA of approximately $9.5
billion anticipated in 2016, this acquisition reinforces our
strategy, accelerates growth and diversifies revenues both by
product and geographically, supporting our new business model. I
strongly believe that as a result of our strengthened financial
profile following this transaction, we will be even better
positioned to reap the benefits of Teva’s integrated, innovative
specialty and generic research to support top-line growth and
expand our portfolio across the business.”
Mr. Vigodman concluded, “This acquisition comes at a time when
Teva is stronger than ever, in both our generics and specialty
businesses. Since the beginning of 2014, we have significantly
strengthened the fundamentals of our company, improved generics
profitability, solidified our key franchises and put in place
robust engines for organic growth, laying the groundwork for
transformative transactions such as this one. This transaction is
another step forward on our roadmap to reinforce our already strong
position. Teva and Allergan Generics share a commitment to
innovation, quality, and improving the health of people around the
world. Together, the employees of Teva and Allergan Generics will
play a critical role ensuring we capture the full potential value
resulting from this transaction. We look forward to delivering the
benefits of this transaction to our stockholders, and better
serving patients, customers and healthcare systems throughout the
world.”
Prof. Yitzhak Peterburg, Chairman of the Teva Board of
Directors, said, “This acquisition will result in significant and
sustained value creation for our stockholders, reinforces our
strategy, accelerates the fulfillment of a new business model,
strongly supports top-line growth and opens a new set of
possibilities for Teva. Together with Allergan Generics, Teva will
have a much stronger, more efficient platform to achieve our goals
– both financially and strategically – with the right platform for
future organic and inorganic growth.”
Substantial Financial Benefits
The transaction is expected to provide substantial financial
benefits for Teva including highly diversified revenues and
profits, and substantial cost synergies and tax savings. Teva
expects Allergan Generics to contribute approximately $2.7 billion
in EBITDA in 2016, excluding synergies. Following the completion of
the acquisition, Teva is expected to have pro forma sales of
approximately $26 billion and EBITDA of approximately $9.5 billion
in 2016, including an estimated $11 billion in sales outside of the
United States. Teva also believes the acquisition will be
significantly accretive to non-GAAP EPS, including expected double
digit non-GAAP EPS accretion in 2016 and more than 20% accretion in
year two and year three following the close of the transaction.
Teva expects to achieve cost synergies and tax savings of
approximately $1.4 billion annually, largely achievable by the
third anniversary of the closing of the transaction. Teva expects
the savings to come from efficiencies in operations, G&A,
manufacturing, and sales and marketing.
Teva expects the acquisition to generate strong free cash flow
of approximately $6.5 billion in 2016 and expects increasing free
cash flow in subsequent years. Teva’s free cash flow will allow for
rapid deleveraging and the ability to continue to pursue future
acquisitions to expand Teva’s portfolio in both specialty
pharmaceuticals and generics, in line with Teva’s stated strategy
to grow through value-enhancing and complementary acquisitions.
Teva will continue to evaluate opportunities to deliver attractive
total stockholder returns on an ongoing basis.
Enhances Teva’s Integrated Business Model through Unmatched
R&D Capabilities and Technology
Teva will have the most advanced R&D capabilities in the
generics industry, directed at fostering innovation, with
approximately 320 combined pending ANDAs in the United States,
including exclusive offerings of approximately 110 U.S. FTF pending
ANDAs.
Teva is well positioned to capture untapped opportunities for
greater integration and innovation between generics and specialty
assets with a single, powerful and differentiated offering. Teva
will possess the capabilities and technologies to focus on complex
generics, biosimilars and specialty products in our key therapeutic
areas, delivering better value and accessibility, while improving
adherence and compliance. Allergan Generics’ strategically focused
R&D engine is built on novel compounds in specialty and primary
care markets where there is significant unmet medical need. With
its existing integration of generics and specialty, Teva will be
able to generate a robust pipeline of high-value medicines, with an
emphasis on complex and branded generics, focused on the needs of
patients and the people who care for them.
Teva’s generics R&D is closely integrated with its extensive
clinical expertise in developing specialty products. This
transaction will afford Teva unrivaled speed and flexibility,
creating a company well positioned to transform the growing global
generics space in markets throughout the world, delivering even
greater value to patients and stockholders, as well as to
healthcare systems around the world, and improving adherence and
health outcomes in general. The result is a company well positioned
to ensure product development activities that support sustainable
long-term organic growth.
Bolsters Promising Specialty Pipeline
Teva has multiple existing specialty pharmaceuticals at various
stages of development, which are expected to drive sustainable
growth in its specialty business. In particular, Teva is committed
to building global leadership in its core specialty franchise
including in central nervous system, pain and migraine and
respiratory. The enhancements that will come from scale and broader
capabilities through the acquisition of Allergan Generics will
provide the resources to further enhance investment in these
franchises. Building on the broadest portfolio of products and
technologies in the generics industry, and on a leading position in
specialty, Teva will continue to strengthen its pipeline by
developing novel products based on known molecules that bring
unique value to patients.
Increases Global Commercial Reach
Teva’s acquisition of Allergan Generics will improve
international commercial opportunities by positioning Teva to
significantly enhance the global scale of its sales and R&D
platforms. Together, Teva and Allergan Generics will have a
commercial presence across 100 markets, including a top three
leadership position in over 40 markets.
The acquisition will help eliminate inefficiencies and
duplications in the global generics space and will allow Teva to
better focus resources and efforts in complex generics, biosimilars
and specialty products in key therapeutic areas. This scale and
breadth of operations will provide Teva with an even more
efficient, flexible and competitive global platform with
industry-leading go-to-market capabilities.
Shared Commitment to Safety and Quality
Teva and Allergan share a commitment to patient safety and
quality. This acquisition furthers Teva’s promising future in
generics with a focus on patient needs, improving compliance,
convenience, efficacy and safety, and providing affordable generic
products to patients and society worldwide. By applying
best-in-class quality standards across an optimized manufacturing
network, Teva will be an even stronger partner to its customers,
enabling them to provide end consumers with safe and effective
products swiftly and reliably. As a result, Teva will be more
competitive in existing key markets as well as attractive new
growth markets.
Teva and Allergan Generics are committed to adherence to all
applicable regulatory requirements and boast the highest industry
standards, dedicated to defining and implementing patient safety
policies and systems, as well as ensuring compliance with all
relevant global and local regulations. Importantly, this
acquisition will improve the standard of quality for employees,
both companies’ customers and the communities in which Teva and
Allergan Generics operate.
Employees to Benefit from Greater Long-Term
Opportunities
Allergan Generics is a natural fit with Teva, and employees will
benefit from substantial opportunities for growth and development
as part of a stronger, industry-leading company. The two companies
share a close cultural and strategic fit, and Teva is focused on
leveraging both organizations’ competencies and talent.
Financing and Approvals
Teva is acquiring Allergan Generics on a cash free and debt free
basis. The transaction consideration of $40.5 billion consists of a
combination of cash and stock. Teva will pay Allergan $33.75
billion in cash, which will be financed through a combination of
new equity, debt financing and cash on hand. Teva expects to
maintain capital structure, balance sheet and financial policies
consistent with investment-grade credit metrics.
Upon closing, Allergan will also receive Teva shares valued
today at $6.75 billion, representing an estimated under 10%
ownership stake in Teva, with the number of shares determined based
on the volume weighted average trading prices for Teva’s stock
during the 15 trading days prior to the announcement and five
trading days following the announcement. Allergan has agreed to
certain restrictions on its ownership of Teva shares, including an
agreement to not transfer such Teva shares for a 12 month period
following closing, as well as customary standstill
restrictions.
The transaction is subject to the expiration or termination of
the applicable waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, as well as other
customary closing conditions. The transaction does not require a
Teva or Allergan stockholder vote. Teva expects to obtain financing
commitments promptly within 15 business days, which it is highly
confident it will be able to arrange on attractive terms. Allergan
will be entitled to terminate the transaction if Teva fails to
obtain these commitments.
Advisors
Barclays and Greenhill & Co. are serving as financial
advisors to Teva. Sullivan & Cromwell LLP and Tulchinsky Stern
Marciano Cohen Levitski & Co are serving as legal counsel to
Teva.
Conference Call and Webcast Information
Teva will host a conference call and live webcast on July 27,
2015 at 8:00 a.m. ET to discuss today’s announcement.
In order to participate, please dial the following numbers (at
least 10 minutes before the scheduled start time): United States
1-866-966-9439; Canada 1-866-966-0399 or International +44(0) 1452
555566; passcode: 96422100. For a list of other international
toll-free numbers, click here.
A live webcast of the call will also be available on Teva's
website at: www.tevapharm.com. Please log in at least 10 minutes
prior to the conference call in order to download the applicable
audio software.
Following the conclusion of the call, a replay of the webcast
will be available within 24 hours on the Company's website. The
replay can also be accessed until August 30, 2015, 10:00 a.m. ET by
calling United States 1-866-247-4222; Canada 1-866-878-9237 or
International +44(0) 1452 550000; passcode: 96422100.
About Teva
Teva Pharmaceutical Industries Ltd. (NYSE and TASE: TEVA) is a
leading global pharmaceutical company that delivers high-quality,
patient-centric healthcare solutions to millions of patients every
day. Headquartered in Israel, Teva is the world’s largest generic
medicines producer, leveraging its portfolio of more than 1,000
molecules to produce a wide range of generic products in nearly
every therapeutic area. In specialty medicines, Teva has a
world-leading position in innovative treatments for disorders of
the central nervous system, including pain, as well as a strong
portfolio of respiratory products. Teva integrates its generics and
specialty capabilities in its global research and development
division to create new ways of addressing unmet patient needs by
combining drug development capabilities with devices, services and
technologies. Teva’s net revenues in 2014 amounted to $20.3
billion. For more information, visit www.tevapharm.com.
Safe Harbor Statement
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995, which are based on Teva’s current beliefs and expectations
and involve a number of assumptions, known and unknown risks and
uncertainties that change over time and could cause future results,
performance or achievements to differ materially from the results,
performance or achievements expressed or implied by such
forward-looking statements. These assumptions, known and unknown
risks and uncertainties include, but are not limited to, those
discussed in our Annual Report on Form 20-F for the year ended
December 31, 2014 and in our other filings with the U.S. Securities
and Exchange Commission (the “SEC”), which factors are incorporated
herein by reference. Forward-looking statements are generally
identified by the words “expects,” “anticipates,” “believes,”
“intends,” “estimates,” “will,” “would,” “could,” “should,” “may,”
“plans” and similar expressions. All statements, other than
statements of historical fact, are statements that could be deemed
to be forward-looking statements, including, but not limited to,
statements about the proposed acquisition of the generics and
over-the-counter businesses of Allergan plc (“Allergan” and the
businesses, the “Allergan Generics and OTC Businesses”), the
financing of the proposed transaction, the expected future
performance (including expected results of operations and financial
guidance), and Teva’s and the Allergan Generics and OTC Businesses’
future financial condition, operating results, strategy and plans.
Important factors that could cause actual results, performance or
achievements to differ materially from the forward-looking
statements we make in this communication include, but are not
limited to: the possibility that the acquisition of the Allergan
Generics and OTC Business will not close; the effects of the
acquisition, including Teva and the Allergan Generics and OTC
Businesses’ future financial condition, operating results, strategy
and plans; uncertainties as to the timing of the transaction; the
failure to procure financing in a timely manner; the possibility
that the expected benefits of the transaction and the integration
of our operations with the Allergan Generics and OTC Businesses’
operations (including any expected synergies) will not be fully
realized by us or may take longer to realize than expected; the
ability to obtain regulatory approvals and satisfy other conditions
to the acquisition on a timely basis and the effect of any
conditions on such regulatory approvals; our ability to comply with
all covenants in our current or future indentures and credit
facilities, any violation of which, if not cured in a timely
manner, could trigger a default of other obligations under cross
default provisions; our and the Allergan Generics and OTC
Businesses’ exposure to currency fluctuations and restrictions as
well as credit risks; future results of on-going or later clinical
trials for the Allergan Generics and OTC Businesses’ product
candidates; our ability to obtain regulatory approvals and
commercialize the Allergan Generics and OTC Businesses’ product
candidates following the closing and market acceptance of such
products; the effects of reforms in healthcare regulation and
pharmaceutical pricing and reimbursement; the costs and expenses
associated with Teva’s rescinded offer to acquire Mylan N.V.,
uncertainties surrounding the legislative and regulatory pathways
for the registration and approval of biotechnology-based medicines;
the impact of competition from other market participants; adverse
effects of political or economic instability, corruption, major
hostilities or acts of terrorism on our or the Allergan Generics
and OTC Businesses’ significant worldwide operations; the impact on
our earnings per share resulting from the planned issuance of
equity for cash to partially finance the acquisition; and other
risks, uncertainties and other factors detailed in our Annual
Report on Form 20-F for the year ended December 31, 2014 and in our
other filings with the SEC. All forward-looking statements
attributable to us or any person acting on our behalf are expressly
qualified in their entirety by this cautionary statement. Readers
are cautioned not to place undue reliance on any of these
forward-looking statements. Forward-looking statements speak only
as of the date on which they are made and we assume no obligation
to update or revise any forward-looking statement, whether as a
result of new information, future events or otherwise.
This document may contain certain non-GAAP financial measures.
Reconciliations between the non-GAAP financial measures and the
GAAP financial measures are available on the company’s website at
http://ir.tevapharm.com.
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version on businesswire.com: http://www.businesswire.com/news/home/20150727005471/en/
InvestorsTeva Pharmaceutical
Industries Ltd.United StatesKevin C. Mannix, 215-591-8912orRan
Meir, 215-591-3033orIsraelTomer Amitai, 972 (3)
926-7656orMediaTeva United
StatesDenise Bradley, 215-591-8974orTeva IsraelIris Beck Codner,
917 (3) 926-7687orUnited StatesJoele Frank, Wilkinson Brimmer
KatcherJoele Frank or Tom Lynch, 212-355-4449
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