Teva Acquisition of Allergan Generics Unit Delayed--Update

By Anne Steele

Teva Pharmaceutical Industries Ltd. said its acquisition of Allergan PLC's generics unit will close later than expected, as it works to obtain approval from federal regulators.

Analysts said the delay may indicate tougher-than-expected negotiations with regulators, possibly leading to the need for more divestitures. In addition, analysts said, the new target date means Teva will likely miss the initial launch on May 2 of generic Crestor, the cholesterol medication, shifting 11 cents in per-share earnings to Allergan.

Shares of Teva, which have fallen about 13% over the past three months, slid 3.8% on Tuesday morning to $220.50.

The company in July agreed to buy Actavis Generics for $40.5 billion in a cash-and-stock deal that will vault the Israeli company into the top ranks of global drugmakers.

On Tuesday, Teva said significant progress has been made toward completing the acquisition, but it now anticipates it could take until as long as June to wrap up the deal based upon its current estimate of the timing to obtain clearance from the U.S. Federal Trade Commission. Teva previously had expected to close the transaction as early as the end of the first quarter.

The company already has regulatory approval from the European Commission.

Sanford C. Bernstein analysts said the FTC is the bottleneck, and the two sides are discussing divestitures, notably on pipeline products. The FTC is waiting for input from the U.S. Food and Drug Administration, and "this process is taking some time." Bernstein said the FDA is likely asking Teva for fairly extensive divestitures, and Teva decided to negotiate those further, which could take three to five weeks.

"The impact of the divestitures will likely be more material than previously believed," the research firm said.

Bernstein also noted that Allergan's much larger tie-up with Pfizer Inc. could be delayed as a result. The companies in November agreed on a historic merger 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.

Teva's acquisition of Allergan's generics unit--the latest in a wave of consolidation in the drug industry--combines Teva, the world's largest generic-drug company by sales, with the third-largest.

It will give Teva increased scale in the 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.

Write to Anne Steele at Anne.Steele@wsj.com

(END) Dow Jones Newswires

March 15, 2016 11:55 ET (15:55 GMT)

Teva Pharmaceutical Indu... (NYSE:TEVA)
Graphique Historique de l'Action
De Juin 2024 à Juil 2024