Acquisition Strongly Reinforces Teva's Strategy, Accelerates the
Creation of Its New Business Model and Opens a New Set of Possibilities
for the Company In Generics and Specialty
Opportunity to Further Transform the Global Generics Space through
Best-In-Class Generics Pipeline, R&D Capabilities, Operational Network,
Supply Chain, Global Commercial Deployment and Infrastructure
Robust Generics Platform to Support Future Strategic Investment in
Specialty
Teva Will Be a Top 10 Global Pharmaceutical Company
Enhanced Financial Profile with Strong, Diversified Revenues
Cost Synergies and Tax Savings of Approximately $1.4 Billion Annually
and More Than 20% Accretion in Years Two and Three Following Close
JERUSALEM--(BUSINESS WIRE)--Jul. 27, 2015--
Teva Pharmaceutical Industries Ltd. (NYSE and TASE:TEVA) today announced
that it has signed a definitive agreement with Allergan plc (NYSE:AGN)
to acquire Allergan Generics in a transaction valued at $40.5 billion.
Upon closing, Allergan will receive $33.75 billion in cash and shares of
Teva valued today at $6.75 billion, representing an estimated under 10%
ownership stake in Teva, with the number of Teva shares determined based
on Teva’s volume weighted average trading prices during the 15 days
prior to the announcement and five days following the announcement. Teva
believes the acquisition will be significantly accretive to non-GAAP
EPS, including expected double-digit non-GAAP EPS accretion in 2016 and
more than 20% accretion in year two and year three following the close
of the transaction. The transaction was unanimously approved by the
Boards of Directors of Teva and Allergan and is expected to close in the
first quarter of 2016.
This strategic acquisition brings together two leading generics
businesses with complementary strengths, brands and cultures, providing
patients with more affordable access to quality medicines, and creating
significant financial benefits for Teva stockholders. The transaction
will create a leader in the INN and branded generics industry with an
overall product portfolio that leads the industry in terms of
differentiation and durability and offers promising growth
opportunities. The new Teva will further transform the global generics
space through its best-in-class generics pipeline, R&D capabilities,
operational network, supply chain, global commercial deployment and
infrastructure to achieve greater efficiencies across the healthcare
system and provide patients and consumers across the globe with better
access to high quality affordable medicines.
When combined with Teva’s strong generics portfolio, Allergan Generics’
world-class generics pipeline, which holds a leading position in
first-to-file opportunities in the U.S., will further enhance Teva’s
goals of delivering the highest quality generic medicines at the most
competitive prices and cultivating the best development pipeline in the
industry. The resulting world-class product portfolio will be
complemented by a significantly expanded and more efficient global
footprint, including leadership positions and strengthened operations,
sales and R&D platforms in attractive markets around the world. In
addition, Teva expects to enhance its financial profile significantly
with highly diversified revenues and profits and to unlock substantial,
achievable cost synergies by eliminating duplication and inefficiencies
on a global scale and capturing economies of scale. The result is a
stronger, more competitive Teva, well positioned to thrive in an
evolving global marketplace and to deliver enhanced value to its
stockholders and other stakeholders.
“This transaction delivers on Teva’s strategic objectives in both
generics and specialty,” said Erez Vigodman, President and CEO of Teva.
“Through our acquisition of Allergan Generics, we will establish a
strong foundation for long-term, sustainable growth, anchored by leading
generics capabilities and a world-class late-stage pipeline that will
accelerate our ability to build an exceptional portfolio of products –
both in generics and specialty as well as the intersection of the two.
Our respective portfolios of generic medicines and applications are
highly complementary, providing Teva with high quality growth and
earnings visibility, and the scale and resources to expand upon our
specialty capabilities.”
Mr. Vigodman continued, “Given our in-depth knowledge and understanding
of Allergan’s world-class generics business, we are confident we can
realize the projected synergies and accretion inherent in this
acquisition for our stockholders and integrate Allergan Generics quickly
into Teva. With pro forma revenues of approximately $26 billion and
combined EBITDA of approximately $9.5 billion anticipated in 2016, this
acquisition reinforces our strategy, accelerates growth and diversifies
revenues both by product and geographically, supporting our new business
model. I strongly believe that as a result of our strengthened financial
profile following this transaction, we will be even better positioned to
reap the benefits of Teva’s integrated, innovative specialty and generic
research to support top-line growth and expand our portfolio across the
business.”
Mr. Vigodman concluded, “This acquisition comes at a time when Teva is
stronger than ever, in both our generics and specialty businesses. Since
the beginning of 2014, we have significantly strengthened the
fundamentals of our company, improved generics profitability, solidified
our key franchises and put in place robust engines for organic growth,
laying the groundwork for transformative transactions such as this one.
This transaction is another step forward on our roadmap to reinforce our
already strong position. Teva and Allergan Generics share a commitment
to innovation, quality, and improving the health of people around the
world. Together, the employees of Teva and Allergan Generics will play a
critical role ensuring we capture the full potential value resulting
from this transaction. We look forward to delivering the benefits of
this transaction to our stockholders, and better serving patients,
customers and healthcare systems throughout the world.”
Prof. Yitzhak Peterburg, Chairman of the Teva Board of Directors, said,
“This acquisition will result in significant and sustained value
creation for our stockholders, reinforces our strategy, accelerates the
fulfillment of a new business model, strongly supports top-line growth
and opens a new set of possibilities for Teva. Together with Allergan
Generics, Teva will have a much stronger, more efficient platform to
achieve our goals – both financially and strategically – with the right
platform for future organic and inorganic growth.”
Substantial Financial Benefits
The transaction is expected to provide substantial financial benefits
for Teva including highly diversified revenues and profits, and
substantial cost synergies and tax savings. Teva expects Allergan
Generics to contribute approximately $2.7 billion in EBITDA in 2016,
excluding synergies. Following the completion of the acquisition, Teva
is expected to have pro forma sales of approximately $26 billion and
EBITDA of approximately $9.5 billion in 2016, including an estimated $11
billion in sales outside of the United States. Teva also believes the
acquisition will be significantly accretive to non-GAAP EPS, including
expected double digit non-GAAP EPS accretion in 2016 and more than 20%
accretion in year two and year three following the close of the
transaction.
Teva expects to achieve cost synergies and tax savings of approximately
$1.4 billion annually, largely achievable by the third anniversary of
the closing of the transaction. Teva expects the savings to come from
efficiencies in operations, G&A, manufacturing, and sales and marketing.
Teva expects the acquisition to generate strong free cash flow of
approximately $6.5 billion in 2016 and expects increasing free cash flow
in subsequent years. Teva’s free cash flow will allow for rapid
deleveraging and the ability to continue to pursue future acquisitions
to expand Teva’s portfolio in both specialty pharmaceuticals and
generics, in line with Teva’s stated strategy to grow through
value-enhancing and complementary acquisitions. Teva will continue to
evaluate opportunities to deliver attractive total stockholder returns
on an ongoing basis.
Enhances Teva’s Integrated Business Model through Unmatched R&D
Capabilities and Technology
Teva will have the most advanced R&D capabilities in the generics
industry, directed at fostering innovation, with approximately 320
combined pending ANDAs in the United States, including exclusive
offerings of approximately 110 U.S. FTF pending ANDAs.
Teva is well positioned to capture untapped opportunities for greater
integration and innovation between generics and specialty assets with a
single, powerful and differentiated offering. Teva will possess the
capabilities and technologies to focus on complex generics, biosimilars
and specialty products in our key therapeutic areas, delivering better
value and accessibility, while improving adherence and compliance.
Allergan Generics’ strategically focused R&D engine is built on novel
compounds in specialty and primary care markets where there is
significant unmet medical need. With its existing integration of
generics and specialty, Teva will be able to generate a robust pipeline
of high-value medicines, with an emphasis on complex and branded
generics, focused on the needs of patients and the people who care for
them.
Teva’s generics R&D is closely integrated with its extensive clinical
expertise in developing specialty products. This transaction will afford
Teva unrivaled speed and flexibility, creating a company well positioned
to transform the growing global generics space in markets throughout the
world, delivering even greater value to patients and stockholders, as
well as to healthcare systems around the world, and improving adherence
and health outcomes in general. The result is a company well positioned
to ensure product development activities that support sustainable
long-term organic growth.
Bolsters Promising Specialty Pipeline
Teva has multiple existing specialty pharmaceuticals at various stages
of development, which are expected to drive sustainable growth in its
specialty business. In particular, Teva is committed to building global
leadership in its core specialty franchise including in central nervous
system, pain and migraine and respiratory. The enhancements that will
come from scale and broader capabilities through the acquisition of
Allergan Generics will provide the resources to further enhance
investment in these franchises. Building on the broadest portfolio of
products and technologies in the generics industry, and on a leading
position in specialty, Teva will continue to strengthen its pipeline by
developing novel products based on known molecules that bring unique
value to patients.
Increases Global Commercial Reach
Teva’s acquisition of Allergan Generics will improve international
commercial opportunities by positioning Teva to significantly enhance
the global scale of its sales and R&D platforms. Together, Teva and
Allergan Generics will have a commercial presence across 100 markets,
including a top three leadership position in over 40 markets.
The acquisition will help eliminate inefficiencies and duplications in
the global generics space and will allow Teva to better focus resources
and efforts in complex generics, biosimilars and specialty products in
key therapeutic areas. This scale and breadth of operations will provide
Teva with an even more efficient, flexible and competitive global
platform with industry-leading go-to-market capabilities.
Shared Commitment to Safety and Quality
Teva and Allergan share a commitment to patient safety and quality. This
acquisition furthers Teva’s promising future in generics with a focus on
patient needs, improving compliance, convenience, efficacy and safety,
and providing affordable generic products to patients and society
worldwide. By applying best-in-class quality standards across an
optimized manufacturing network, Teva will be an even stronger partner
to its customers, enabling them to provide end consumers with safe and
effective products swiftly and reliably. As a result, Teva will be more
competitive in existing key markets as well as attractive new growth
markets.
Teva and Allergan Generics are committed to adherence to all applicable
regulatory requirements and boast the highest industry standards,
dedicated to defining and implementing patient safety policies and
systems, as well as ensuring compliance with all relevant global and
local regulations. Importantly, this acquisition will improve the
standard of quality for employees, both companies’ customers and the
communities in which Teva and Allergan Generics operate.
Employees to Benefit from Greater Long-Term Opportunities
Allergan Generics is a natural fit with Teva, and employees will benefit
from substantial opportunities for growth and development as part of a
stronger, industry-leading company. The two companies share a close
cultural and strategic fit, and Teva is focused on leveraging both
organizations’ competencies and talent.
Financing and Approvals
Teva is acquiring Allergan Generics on a cash free and debt free basis.
The transaction consideration of $40.5 billion consists of a combination
of cash and stock. Teva will pay Allergan $33.75 billion in cash, which
will be financed through a combination of new equity, debt financing and
cash on hand. Teva expects to maintain capital structure, balance sheet
and financial policies consistent with investment-grade credit metrics.
Upon closing, Allergan will also receive Teva shares valued today at
$6.75 billion, representing an estimated under 10% ownership stake in
Teva, with the number of shares determined based on the volume weighted
average trading prices for Teva’s stock during the 15 trading days prior
to the announcement and five trading days following the announcement.
Allergan has agreed to certain restrictions on its ownership of Teva
shares, including an agreement to not transfer such Teva shares for a 12
month period following closing, as well as customary standstill
restrictions.
The transaction is subject to the expiration or termination of the
applicable waiting periods under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, as well as other customary closing
conditions. The transaction does not require a Teva or Allergan
stockholder vote. Teva expects to obtain financing commitments promptly
within 15 business days, which it is highly confident it will be able to
arrange on attractive terms. Allergan will be entitled to terminate the
transaction if Teva fails to obtain these commitments.
Advisors
Barclays and Greenhill & Co. are serving as financial advisors to Teva.
Sullivan & Cromwell LLP and Tulchinsky Stern Marciano Cohen Levitski &
Co are serving as legal counsel to Teva.
Conference Call and Webcast Information
Teva will host a conference call and live webcast on July 27, 2015 at
8:00 a.m. ET to discuss today’s announcement.
In order to participate, please dial the following numbers (at least 10
minutes before the scheduled start time): United States 1-866-966-9439;
Canada 1-866-966-0399 or International +44(0) 1452 555566; passcode:
96422100. For a list of other international toll-free numbers, click here.
A live webcast of the call will also be available on Teva's website at: www.tevapharm.com.
Please log in at least 10 minutes prior to the conference call in order
to download the applicable audio software.
Following the conclusion of the call, a replay of the webcast will be
available within 24 hours on the Company's website. The replay can also
be accessed until August 30, 2015, 10:00 a.m. ET by calling United
States 1-866-247-4222; Canada 1-866-878-9237 or International +44(0)
1452 550000; passcode: 96422100.
About Teva
Teva Pharmaceutical Industries Ltd. (NYSE and TASE: TEVA) is a leading
global pharmaceutical company that delivers high-quality,
patient-centric healthcare solutions to millions of patients every day.
Headquartered in Israel, Teva is the world’s largest generic medicines
producer, leveraging its portfolio of more than 1,000 molecules to
produce a wide range of generic products in nearly every therapeutic
area. In specialty medicines, Teva has a world-leading position in
innovative treatments for disorders of the central nervous system,
including pain, as well as a strong portfolio of respiratory products.
Teva integrates its generics and specialty capabilities in its global
research and development division to create new ways of addressing unmet
patient needs by combining drug development capabilities with devices,
services and technologies. Teva’s net revenues in 2014 amounted to $20.3
billion. For more information, visit www.tevapharm.com.
Safe Harbor Statement
This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995, which
are based on Teva’s current beliefs and expectations and involve a
number of assumptions, known and unknown risks and uncertainties that
change over time and could cause future results, performance or
achievements to differ materially from the results, performance or
achievements expressed or implied by such forward-looking statements.
These assumptions, known and unknown risks and uncertainties include,
but are not limited to, those discussed in our Annual Report on Form
20-F for the year ended December 31, 2014 and in our other filings with
the U.S. Securities and Exchange Commission (the “SEC”), which factors
are incorporated herein by reference. Forward-looking statements are
generally identified by the words “expects,” “anticipates,” “believes,”
“intends,” “estimates,” “will,” “would,” “could,” “should,” “may,”
“plans” and similar expressions. All statements, other than statements
of historical fact, are statements that could be deemed to be
forward-looking statements, including, but not limited to, statements
about the proposed acquisition of the generics and over-the-counter
businesses of Allergan plc (“Allergan” and the businesses, the “Allergan
Generics and OTC Businesses”), the financing of the proposed
transaction, the expected future performance (including expected results
of operations and financial guidance), and Teva’s and the Allergan
Generics and OTC Businesses’ future financial condition, operating
results, strategy and plans. Important factors that could cause actual
results, performance or achievements to differ materially from the
forward-looking statements we make in this communication include, but
are not limited to: the possibility that the acquisition of the Allergan
Generics and OTC Business will not close; the effects of the
acquisition, including Teva and the Allergan Generics and OTC
Businesses’ future financial condition, operating results, strategy and
plans; uncertainties as to the timing of the transaction; the failure to
procure financing in a timely manner; the possibility that the expected
benefits of the transaction and the integration of our operations with
the Allergan Generics and OTC Businesses’ operations (including any
expected synergies) will not be fully realized by us or may take longer
to realize than expected; the ability to obtain regulatory approvals and
satisfy other conditions to the acquisition on a timely basis and the
effect of any conditions on such regulatory approvals; our ability to
comply with all covenants in our current or future indentures and credit
facilities, any violation of which, if not cured in a timely manner,
could trigger a default of other obligations under cross default
provisions; our and the Allergan Generics and OTC Businesses’ exposure
to currency fluctuations and restrictions as well as credit risks;
future results of on-going or later clinical trials for the Allergan
Generics and OTC Businesses’ product candidates; our ability to obtain
regulatory approvals and commercialize the Allergan Generics and OTC
Businesses’ product candidates following the closing and market
acceptance of such products; the effects of reforms in healthcare
regulation and pharmaceutical pricing and reimbursement; the costs and
expenses associated with Teva’s rescinded offer to acquire Mylan N.V.,
uncertainties surrounding the legislative and regulatory pathways for
the registration and approval of biotechnology-based medicines; the
impact of competition from other market participants; adverse effects of
political or economic instability, corruption, major hostilities or acts
of terrorism on our or the Allergan Generics and OTC Businesses’
significant worldwide operations; the impact on our earnings per share
resulting from the planned issuance of equity for cash to partially
finance the acquisition; and other risks, uncertainties and other
factors detailed in our Annual Report on Form 20-F for the year ended
December 31, 2014 and in our other filings with the SEC. All
forward-looking statements attributable to us or any person acting on
our behalf are expressly qualified in their entirety by this cautionary
statement. Readers are cautioned not to place undue reliance on any of
these forward-looking statements. Forward-looking statements speak only
as of the date on which they are made and we assume no obligation to
update or revise any forward-looking statement, whether as a result of
new information, future events or otherwise.
This document may contain certain non-GAAP financial measures.
Reconciliations between the non-GAAP financial measures and the GAAP
financial measures are available on the company’s website at http://ir.tevapharm.com.
View source version on businesswire.com: http://www.businesswire.com/news/home/20150727005471/en/
Source: Teva Pharmaceutical Industries Ltd.
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