Teva says Actavis Closing on Track
Israel-based Teva, the world's largest generic drugmaker, still expects its $40.5 billion acquisition of Allergan's generics business, which trades as Actavis, to close in June, the company said in presenting results for the 2016 first quarter. The confirmation follows recent speculation that closing of the deal might be delayed after the news agency Reuters said last week the company might have to sell assets worth $2 billion – double the initially mentioned figure – to win regulatory approval.
Closing has already been postponed twice, due to the lengthy probe by US antitrust authorities. Sigurdur Olafsson, head of Teva’s global generics operations, told journalists attending the results conference that the company expects to achieve cost synergies and tax savings of $1.4 billion annually, at the latest by the third anniversary of the deal’s closing. This is assuming divestments of around about $1.1 billion of net revenue.
Some analysts believe the acquisition price could now be too high in view of falling prices for generics as well as ethical drugs. However, they said while Teva may try to renegotiate the price, it is unlikely to want to call the deal off and pay a $2.5 billion penalty to Allergan.
Still reeling from the breakdown of the plan to sell all but the generics business to Pfizer, Allergan probably won’t want to take back its generic division, some observers said.