Teva Pharmaceutical Industries has agreed to buy rival, Ivax Corporation, in a $7.4 billion dollar deal that propels it back to the top spot in the world generics league table just months after Switzerland’s Novartis announced its own plans to become the world’s biggest maker of copycat drugs [[21/02/05b]].
Although the announcement was not completely unexpected after speculation mounted over the weekend that a deal was on the cards, Ivax’ share price shot up by more than 14% on the Amex Stock Exchange, while Teva’s share price also posted good gains. Novartis, however, saw its share price slide marginally on many of the world’s markets as the Swiss company’s 5.7 billion euros ($6.9 billion) purchase of Hexal and Eon Labs no will longer be enough to head up the generics league table.
Under the terms of the agreement, Ivax shareholders will be entitled to $26 for each share of common stock – a 14% premium on the company’s closing share price on Friday – or 0.8471 Teva shares. The Israeli company is using a combination of cash and credit facilities to fund the cash portion of the deal. Once the transaction is complete, Ivax shareholders will own around 15% of the enlarged company.
In a conference call, Teva explained that the two firms are a good match in terms of products and geographies. With the purchase, Teva will retain its leading position in the US market, and improve its standing in Europe, particularly France, Russia, the Czech Republic and Poland. The firm also noted that Ivax brings with it complementary product lines in generics, as well as a significant respiratory business and a rich pipeline of both generic and proprietary medicines in the respiratory, central nervous system and oncology fields. Teva claims that its generics pipeline will be three times larger than that of its nearest rival.
The deal, which remains subject to anti-trust clearance and other standard closing conditions in both Europe and the US, is expected to close some time towards the end of 2005, or the beginning of 2006. During the conference call, Teva acknowledged that the regulators will likely look at the two firms’ pipelines, but said it felt “very positive” about the pipelines’ complementary nature. The combined company will have annual sales in the region of $7 billion and the transaction is expected to become accretive to earnings as early as the first year.
In a statement, Israel Makov, Teva’s president and chief executive, said: “Bringing our two companies together will vastly enhance our leadership position in the global generic industry. The combination of our two complementary businesses will allow Teva to expand and strengthen our global generic and branded businesses with additional products, a deeper pipeline, and a wider presence in new therapeutic areas and growth markets.”