The battle for Ratiopharm is over and Teva Pharmaceutical Industries has beaten off Pfizer and Actavis to acquire the German generics group.

Teva is paying 3.63 billion euros to buy the sixth largest generic drug company worldwide and the combined firm would have had 2009 revenues of $16.2 billion. The transaction is expected to be completed by the end of the year.

The rationale behind the deal is that it will position Teva as the leading generic pharmaceutical company in Europe, increasing its business there from sales of $3.3 billion in 2009 to $5.2 billion. It also inherits Ratiopharm's “robust portfolio includes 500 molecules in over 10,000 presentation forms covering all major therapeutic areas marketed in 26 countries”.

Teva noted that Ratiopharm also has “valuable know-how in biosimilars, consisting of a number of products in advanced stages of development and a well-established sales and marketing team”. Chief executive Shlomo Yanai said the transaction “is perfectly aligned with our long-term strategy in which Europe is an important pillar and growth driver”

He added that it will strengthen its position most notably in Germany, a generic market worth $8.8 billion, as well as in Spain, Italy and France. Mr Yanai went on to say that Teva and Ratiopharm “have similar corporate cultures and share a strategic vision which makes this combination a natural fit”.

Hans-Joachim Ziems, managing director of Ratiopharm's ex-owner VEM Holding and chief of the bidding process, said ”we have emphasised from the beginning that the strategic concept of the integration of Ratiopharm into the acquiring company will play a critical role in the decision in addition to the purchase price”. He added that “now, we have succeeded in putting the company under the strategic umbrella of Teva as a prosperous unit, while taking into account the interests of the employees, of VEM and of the Merckle Group's creditors."

Indeed, Ludwig Merckle, who took over as head of the conglomerate following the suicide of his father Adolf Merckle, said the “separation of Ratiopharm is a painful step for us as the founding family”. He went on to say that “taking this as given, I am confident that this is a good solution”.

Once the deal is completed, Teva expects synergies of at least $400 million within three years and it should be earnings accretive within three quarters after closing. The transaction will be funded through a combination of cash and lines of credit.