Teva, Allergan Tweak Acquisition Agreement

By Brittney Laryea 

Teva Pharmaceutical Industries Ltd. and Allergan PLC on Wednesday said they had tweaked the terms of Teva's purchase of Allergan's generics business, including pushing back a key date that illustrates how long the deal is taking to close.

The companies said they had moved back the date at which either company could back out of the agreement, under certain circumstances, to Oct. 26 from July 26 -- which is a year after the deal was struck. When the deal was originally announced, the companies said they expected the deal to close in the first quarter of this year.

The companies also excluded two generic drugs, Actonel and Carafate, from the agreement and reduced the cash consideration for the deal, whose original price tag was $40.5 billion, by $221 million because of the move. In the latest quarter, Allergan's Carafate sales were $61 million, up 14% from a year earlier. The company didn't break out sales of Actonel in its latest quarterly report.

Israeli-based Teva entered the cash-and-stock agreement to buy Allergan's generics unit in July 2015. The deal combines Teva, the world's largest generic-drug company by sales, with the third-largest competitor in the market. It included $33.75 billion in cash and Teva shares valued at $6.75 billion.

The acquisition would enter Teva into the top ranks of global drugmakers and give the company increased scale in an increasingly competitive generic-drug market. Teva would also reduce costs, helping with a wave of big patent expirations.

Allergan will get some cash to pay down its debts and the ability to focus on the more profitable name-brand drugs. Formerly Actavis, Allergan changed its name in 2015 after completing deals totaling about $100 million that gave it band-name drugs like Botox.

Midsize companies such as Teva have largely driven the breakneck pace of consolidation in the drug industry in recent years -- part of a broader boom in mergers and acquisitions. Meanwhile, bigger, better-established rivals have largely been on the sidelines of major deal making.

In March, Teva said its Allergan acquisition would close later than originally expected, possibly delayed by tougher-than-expected negotiations with regulators and indicating a possible need for more divestitures. The delay meant that Teva missed the initial May 2 launch of Allergan's generic drug Crestor, shifting 11 cents in per-share earnings to the smaller company.

Shares of Teva rose 2.4% premarket, while Allergan shares edged down 0.3%.

Write to Brittney Laryea at brittney.laryea @wsj.com

(END) Dow Jones Newswires

July 13, 2016 09:16 ET (13:16 GMT)

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