TEVA Teva Pharmaceutical Industries Ltd

By Natalia Drozdiak 

BRUSSELS--The European Union on Thursday approved Teva Pharmaceutical Industries Ltd. $40.5 billion takeover of Allergan PLC's generics unit on the condition the companies divest several assets.

The European Commission, the bloc's antitrust authority, said the companies would also have to divest all the marketed molecules as well as the molecules currently being developed, which create competition concerns in the bloc, the EU said.

The commission said it had had concerns the merged entity would have faced insufficient competition from the remaining rivals for a number of generic drugs, especially in the U.K. Ireland and Iceland.

"I am glad we have found a solution that allows this takeover to proceed, while ensuring that competition will continue in all European countries, " said the EU's antitrust chief Margrethe Vestager. "Effective competition between generic pharmaceutical manufacturers is essential to drive down prices for patients and healthcare systems."

The Israeli company announced last July it would buy the Allergan unit, in a deal that will combine Teva--the world's largest generic-drug company by sales--with the third-largest competitor in the market.

The acquisition will give Teva increased scale in the hotly competitive generic-drug market, and an opportunity to pursue further cost reductions that could help it cope with the end of a wave of big patent expirations.

Dublin-based Allergan in November agreed to merge with Pfizer Inc., in a deal worth more than $150 billion that would create the world's biggest drugmaker and move one of the top names in corporate America to a foreign country.

Write to Natalia Drozdiak at natalia.drozdiak@wsj.com

(END) Dow Jones Newswires

March 10, 2016 09:52 ET (14:52 GMT)

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