No1 generic drugs maker Teva acquires rival Barr Pharma for $7.46 billion

18 July 2008

Israel's Teva Pharmaceutical Industries Ltd., the world's biggest maker of generic drugs, agreed to buy American rival Barr Pharmaceuticals Inc. for $7.46 billion in to expand into new markets and widen its lead in this segment. The Sandoz division of Swiss drugmaker Novartis AG is the second-largest maker of generic drugs.

The deal is the latest in a wave of consolidation in the generic-drug sector that some analysts suspect will result in only a handful of major global players.

The proposed acquisition of India's biggest drugmaker Ranbaxy by Japanese major Daiichi Sankyo Company is one such deal. ( See: Daiichi to make open offer for Ranbaxy on August 8)

Sun Pharmaceutical's proposed $454 million takeover of Israel's Taro Pharmaceutical Industries Ltd is another. (See: Sun Pharmaceutical to acquire Taro Pharma for $454 million)

The purchase price values Barr at $66.50 a share, up 16 per cent from yesterday's close, the companies said today in a statement. Barr, based in Montvale, New Jersey, had already risen 22 per cent yesterday on unconfirmed reports of the purchase by Teva, of Petah Tikva, Israel. Barr rose to $62 in early trading, while Teva rose 2 per cent to $42.

For each share of common stock, Barr shareholders will receive $39.90 cash and 0.6272 of Teva American depositary receipts valued at $26.60, based on the $42.41 closing price of Teva's ADRs on 16 July, the companies said. In addition, Teva will assume Barr's debt of about $1.5 billion. Teva will fund the acquisition with cash, marketable securities and long-term debt, it said.