TEVA Teva Pharmaceutical Industries Ltd

TEVA PHARMACEUTICAL

Allergan to Sell Generics Distributor

Teva Pharmaceutical Industries Ltd. said it would purchase Allergan PLC's generic pharmaceuticals distributor for $500 million, just a day after Teva closed its much larger deal to buy Allergan's generics business.

Teva is buying Allergan's Anda Inc., the fourth-largest distributor of generic pharmaceuticals in the U.S.

On Tuesday, Teva closed its $40.5 billion deal for Allergan's generics business. They first struck that deal last July, but it was delayed due to regulatory hurdles. Teva ended up having to divest 75 drugs to rivals to win Federal Trade Commission approval.

Anda distributes drugs from more than 300 manufacturers to pharmacies across the U.S. In 2016 Anda is expected to generate more than $1 billion in third-party net revenue.

As part of the deal, Teva will acquire distribution centers in Olive Branch, Miss., Weston, Fla., and Groveport, Ohio. Anda will operate as a stand-alone business. The deal is subject to regulatory approval and other closing conditions and is expected to close in the second half of the year.

--Austen Hufford

RIO TINTO

Price Upturn Called Unlikely to Last

SYDNEY -- Rio Tinto PLC's new chief joined the ranks of mining executives quashing the idea that this year's recovery in minerals prices will last, as the iron-ore giant reported its worst first-half results in 12 years.

Jean-Sébastien Jacques said an about-turn in metals and bulk commodities prices stems from a credit-fueled bounce in Chinese construction activity that might not be sustained, while a deepening iron-ore supply glut weighs on the division that accounts for most of the company's profits.

"Growth in China has stabilized, but it is on a long transition path of slower and less commodity-intensive growth," Rio Tinto said. "Meanwhile the global economy seems stuck in a subdued low-productivity growth pattern which would indicate that continued caution is required for the second half of 2016."

On Wednesday, Rio Tinto said underlying earnings, which strip out one-time items, fell 47% to $1.56 billion in the first half of the year. That was in line with the median forecast of seven analysts surveyed by The Wall Street Journal.

The Anglo-Australian mining company said its net profit for the first half was $1.71 billion. That compared with $806 million in the same period of last year, when write-downs and exchange-rate and derivative losses hurt its bottom line. Rio Tinto cut its interim dividend to 45 cents a share from $1.075 a year earlier.

Prices for commodities including coal, iron ore and industrial metals climbed in recent months, many bouncing from multiyear lows as the pace of mining growth slowed, China's appetite for imports remained strong and investors poured money back into the markets.

The S&P GSCI Industrial Metals index increased roughly 8% during the first half and iron ore held mainly above $50 a metric ton versus a price as low as $37 a ton in December. Iron ore was supported by strong steel output in China, even after a pledge to curb overproduction. Still, prices remained well below those in the heady days of the China-led commodities boom.

Last week, Anglo American PLC Chief Executive Mark Cutifani warned that the mining industry probably faces a tougher market in the last half of the year. He was downbeat about the iron-ore market because of expanding supply.

The International Monetary Fund in July downgraded its forecast for global economic growth for this year and next. It said that the U.K.'s vote to leave the European Union would weigh on the world economy, and warned that a host of threats including geopolitical turmoil, rising protectionism and terrorist attacks could send growth into a deeper rut.

In China, recent data has offered a mixed reading of its economy. A government survey showed manufacturing contracted for the first time in five months in July, while a private-sector gauge of factory activity pointed to its first expansion in 17 months.

Economists have recommended that China maintain a loose monetary policy and strong infrastructure spending as it targets annual growth of 6.5% to 7% in the face of weak exports, declining demand and a cooling property market.

China is the largest buyer of most metals and bulk commodities. Rio Tinto's iron-ore division, which reported a 17% fall in underlying earnings, is exposed to any further slowdown in China's economy.

Also, the startup of new mines and Rio Tinto's own increased shipments of the steelmaking commodity are contributing to a cloudy price outlook.

While Citigroup last month increased its price forecasts for iron ore for the coming 18 months, it still projected the commodity would head back to decade-low territory in 2017. Morgan Stanley predicts a glut in the international market will continue to swell until at least the end of this decade.

"We expect the overall market conditions to remain challenging and volatile," said Mr. Jacques, who succeeded Sam Walsh as Rio Tinto's chief executive last month.

To counter the uncertain outlook for commodity prices, Rio Tinto has been cutting costs and repaying debt. It reduced costs by $580 million in the first half and aims to cut a further $1.42 billion by the end of 2017. Its net debt fell 6% during the six-month period, to $12.90 billion.

Rio Tinto has also abandoned a policy of keeping investor payouts stable or rising year after year.

The company said in February it could no longer justify the commitment when the outlook for the global economy was worsening and that future dividends would be more closely linked to market conditions.

Still, the company is laying out plans for new mines, seeking to be in pole position when global commodity markets recover.

Projects include an underground copper mine in Mongolia and a bauxite mine in Australia. This week, it also approved a $338 million plan to complete the development of its Silvergrass iron-ore mine in the iron-rich Pilbara region of Western Australia.

"One might say it was a boring set of results," Goldman Sachs said in a note about Rio Tinto's earnings. "But in this day and age, boring is good."

--Rhiannon Hoyle

SKULLCANDY

Incipio Set to Buy Headphone Maker

Skullcandy Inc. agreed to be acquired by Incipio LLC with a sweetened offer that values the headphone maker at roughly $188.6 million, potentially ending a takeover battle with private-equity firm Mill Road Capital Management.

Incipio, whose products include accessories for smartphones and tablets, raised its offer to $6.10 a share, topping shareholder Mill Road Capital's bid of $6.05 a share for the stake in the company it didn't already own.

Skullcandy said it no longer considers the offer by Mill Road, which valued the company at $173.2 million, superior to Incipio's initial offer of $5.75.

Mill Road, which disclosed a 9.8% stake in Skullcandy in June, made its offer just days after the headphone maker reached its initial deal with Incipio. That agreement with Incipio had included a one month "go-shop" period to look for higher offers and a termination fee of $6.2 million that Skullcandy could pay to Incipio.

Earlier in June, the investment firm of Skullcandy founder and former Chief Executive Rick Alden said it was exploring whether to pursue taking the headphone maker private.

Skullcandy shares, down 15% in the past year, closed Tuesday at $6.06 a share and were inactive premarket.

--Tess Stynes

(END) Dow Jones Newswires

August 04, 2016 02:48 ET (06:48 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.