Teva buys Allergan Plc’s for $40 billion

Tel Aviv: Israeli drug maker Teva Pharmaceutical Industries has agreed to buy Allergan Plc’s generic drugs business for $40.5 billion in a cash and stock deal that will turn the Israeli company into one of the world’s largest pharmaceutical firms.

The deal, the largest in Israel’s corporate history, prompted Teva to drop its $40 billion hostile bid for Mylan.

It also will allow Dublin-based Allergan, which combined with generics maker Actavis earlier this year in a $66 billion deal, to focus on branded drugs and pay down its debt. “Allergan’s business is more high-end (than Mylan). It’s a more interesting business... a profitable business and it’s well managed,” said Gilad Alper, an analyst at brokerage Excellence Nessuah, noting a “friendly deal” is preferable to a hostile one.

Allergan is the third-largest generic drugmaker in the United States and is seen as a better fit than Mylan because it will improve Teva’s distribution channels, access to profitable injectable drugs, and provide a presence in India.

Teva has been fighting a bitter battle for its multiple sclerosis drug Copaxone, which accounts for about half of Teva’s profit.