Teva Pharmaceutical Industries to buy Allergan Plc’s generic drug business for US$40.5 billion, drops Mylan bid

A logo is displayed on employees white factory overalls hanging on a rail at Teva Pharmaceutical Industries Ltd. factory. Teva has agreed to buy Allergan Plc\'s generic drugs business for US$40.5 billion in a cash and stock deal.

TEL AVIV – Teva Pharmaceutical Industries has agreed to buy Allergan Plc\’s generic drugs business for US$40.5 billion in a cash and stock deal which will turn the Israeli company into one of the world\’s largest pharmaceutical firms.

The deal, the biggest in Israel\’s corporate history, prompted Teva to drop its US$40-billion hostile bid for Mylan , which had hit a snag when a Dutch foundation from the target bought temporary control of half the organization in an attempt to block the takeover.

It will also allow Dublin-based Allergan, the third-largest generic drugmaker in the United States, to focus on branded drugs and pay down its debt.

\”Allergan\’s clients are more high end (than Mylan). It is a more interesting business … a profitable business and it is well managed,\” said Gilad Alper, an analyst at brokerage Excellence Nessuah, noting a \”friendly deal\” is preferable to a hostile one.

Allergan\’s generic clients are seen as a better fit than Mylan because it will improve Teva\’s distribution channels and since Allergan is strong in so-called biosimilar drugs, in addition to injectables, and has a name in India.

Pressure continues to be growing on Teva, already the world\’s biggest generic drugmaker, to find new revenue sources to combat the beginning of competition this season for its multiple sclerosis drug Copaxone. Copaxone makes up about about half of Teva\’s profit.

The acquisition is the latest within an unprecedented wave of healthcare deals because the start of 2014, stretching from large drugmakers buying up smaller rivals, to consolidation among makers of generic medicines, to tie-ups between insurers.

Global healthcare M&A so far this year reached US$398.5 billion as of July 23, up 80 % on a last year, according to Thomson Reuters data.