Teva Pharmaceutical Industries Ltd. (NYSE:TEVA) $40B Deal With Allergan Plc (NYSE:AGN), To Conclude “Any Time”

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Teva Pharmaceutical Industries Ltd. (NYSE:TEVA) has revealed on Wednesday that its $40-billion acquisition of Allergan plc (NYSE:AGN) generic business is expected to be completed “any time” despite both parties coming to terms to extend the agreement deadline until October. As the closing of the deal approaches, Teva is hoping to generate about $20 billion to $25 billion in debt funding.

When the companies had first disclosed the acquisition, they expected it to be fulfilled by the first quarter of 2016. Later on, the completion was expected to transpire by July 26, and now, October. The delays are largely attributed to strict regulatory requirements and mandates. However, company executives are confident that there will be no further delays to prevent the deal from coming to fruition.

Terms of Acquisition

The new terms of the deal have not included the generic drugs Actonel and Carafate, reducing the overall amount by more than $200 million. Moreover, according to the agreement, Teva has already sold numerous assets to third parties such as Dr. Reddy’s Laboratories Ltd. (ADR) (NYSE:RDY), Impax Laboratories Inc. (NASDAQ:IPXL), and Mayne Pharma Group Ltd. (ASX:MYX) — in an attempt to receive the US Federal Trade Commission (FTC) clearance and European Commission approval following regulatory review of the deal.

What It Means for Teva Pharmaceutical Industries

This multibillion dolalr generic business acquisition will allow Teva to become once again the biggest generic drug maker in the world. Erez Vigodman, Teva Pharmaceutical Industries CEO, noted that profits are expected to hit the $8-billion mark by 2019. He added that sales could reach up to nearly $28 billion in the next three years.

Ronny Gal, Bernstein analyst, reiterated that the company is nearly guaranteed to secure its position in the pharmaceutical industry in the long run as soon as these expectations are consistently met — or even topped.

As for Allergan, it can use the profit from the deal to settle its debts. Also, unloading its generics business will allow it to reinstate its focus on branded drugs, which generate more profit.

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