Saturday 19 July, 2008

Merger details:Teva to Acquire Barr


Teva and Barr announced today that they have signed a definitive agreement under which Teva will acquire Barr, the fourth largest generic drug company worldwide. Under the terms of the agreement, each share of Barr common stock will be converted into $39.90 in cash and 0.6272 Teva ADRs. Based upon the unaffected NASDAQ closing price of Teva's ADRs on July 16, 2008, the indicated combined per share consideration for each outstanding share of Barr common stock amounts to $66.50, or a total consideration of $7.46 billion plus the assumption of net debt of approximately $1.5 billion.
Teva expects the transaction to close in late 2008 and to become accretive to GAAP earnings in the fourth quarter after closing. This purchase price represents a premium of 32% to Barr's average daily closing price on the New York Stock Exchange for the 52-week period ending on July 16, 2008, and 42% to the closing price on July 16, 2008.
This acquisition will further enhance Teva's leadership position in the U.S. and will significantly strengthen its position in key European and Central and Eastern European markets. On a pro forma basis, 2007 revenues of the combined company would have been approximately $11.9 billion. The combined company will have an unmatched global platform, operate directly in more than 60 countries and employ approximately 37,000 people worldwide.
The companies' highly complementary product offerings and development pipelines will extend Teva's generic and proprietary offerings for customers globally. By adding development resources and breadth to Teva's product portfolio and pipeline, particularly the Paragraph IV and first to file opportunities, Teva will bring more products to market while increasing access to affordable medicines. The transaction also bolsters Teva's specialty pharmaceutical platform through the addition of Barr's substantial women's health portfolio to Teva's respiratory franchise, further enhancing Teva's balanced business model.
Shlomo Yanai, President and Chief Executive Officer of Teva, said, "The acquisition of Barr will elevate Teva's market leadership to a new level. The combination of our two companies provides an outstanding opportunity strategically and economically: It will enhance our market share and leadership position in the U.S. and key global markets, further strengthen our portfolio and pipeline, and provide upside to our strategic plan, by allowing us to exceed our 20/20 goals for 2012."
Mr. Yanai continued, "We have long admired Barr as a highly-focused company with an excellent management team. This is a transaction in which two great, strong companies are joining forces to capture an even greater share of the growing opportunities in generics and deliver even more value to our stakeholders."
Bruce Downey, Chairman and Chief Executive Officer of Barr, said, "This transaction will enable Teva to capitalize on Barr's portfolio of unique generic and proprietary products, benefit from our capabilities in biologics, and expand its presence in important Central and Eastern European markets. This agreement has the full support of Barr's Board of Directors and senior management, and will benefit the shareholders, customers and employees of Barr."
Key benefits of the transaction include:
-- Exceptional Fit Supporting Teva's Long-Term Strategy: The transaction combines two industry-leading companies, further enhancing Teva's lead in the U.S. and delivering increased scale and expanded geographic footprint in key global growth markets.
-- Expanding the Breadth of the Product Portfolio and Pipeline: Teva and Barr's product offerings are highly complementary, extending Teva's product portfolio and pipeline into new and attractive product categories. The combined company will have over 500 currently marketed products; more than 200 ANDAs pending with the FDA with annual brand sales of greater than $120 billion, including approximately 70 first to file Paragraph IV challenges; and approximately 3,700 product registrations pending with various regulatory authorities worldwide, primarily in Europe.
-- Strengthening Teva's Balanced Business Model: The transaction also bolsters Teva's specialty pharmaceutical platform through the addition of Barr's substantial women's health portfolio to Teva's respiratory franchise, further enhancing and diversifying Teva's balanced business model. Additionally, this transaction augments Teva's biologics capabilities.
-- Compelling Value Consistent with Stated Acquisition Criteria: The combination is expected to deliver significant revenue and cost synergies based on numerous operational efficiencies, increased scale and geographic scope. Teva anticipates the transaction will generate at least $300 million in annual cost savings within 3 years and will continue to provide additional cost savings well beyond 2011. The transaction is expected to be accretive to GAAP earnings in the fourth quarter after closing. The acquisition offers considerable value with a financial structure that preserves Teva's strong balance sheet and flexibility.
-- Enhanced Growth and Profitability Provide Upside to 20/20 Strategic Target: The Barr acquisition will enable us to exceed our 20/20 five-year strategic plan, which was to double revenues by 2012 to $20 billion with net income margins of at least 20 percent.
Transaction Terms:
Under the terms of the agreement, Teva will acquire 100% of the shares of Barr for total cash and stock consideration of $7.46 billion. Each share of Barr's common stock will be converted into $39.90 in cash and 0.6272 Teva ADRs. In addition, Teva will assume Barr's outstanding net debt of approximately $1.5 billion. Teva intends to fund the cash portion of the consideration by using its cash on hand and marketable securities and by approaching the long-term debt market for the remaining balance.
Approvals and Timing:
The boards of directors of both companies have unanimously approved the transaction. The acquisition is subject to approval by the stockholders of Barr, antitrust notification and clearance statutes in North America and Europe, as well as other customary conditions. The transaction is expected to close in late 2008.
The Merger Agreement may be terminated under certain circumstances, including if Barr's Board of Directors determines to accept an unsolicited superior proposal prior to approval of the merger by Barr's stockholders. If the merger agreement is terminated under certain circumstances, Barr will be required to pay Teva a termination fee of $200 million.
Lehman Brothers acted as financial advisor to Teva in this transaction, and Willkie Farr & Gallagher LLP provided external legal counsel for Teva. Banc of America Securities LLC acted as financial advisor to Barr in this transaction, and Simpson Thacher & Bartlett LLP provided external legal counsel for Barr.

Barr is a global specialty pharmaceutical company that operates in more than 30 countries worldwide and is engaged in the development, manufacture and marketing of generic and proprietary pharmaceuticals, biopharmaceuticals and active pharmaceutical ingredients. A holding company, Barr operates through its principal subsidiaries: Barr Laboratories, Inc., Duramed Pharmaceuticals, Inc. and PLIVA d.d. and its subsidiaries. The Barr Group of companies markets more than 120 generic and 27 proprietary products in the U.S. and approximately 1,025 products globally outside of the U.S.

(Source: Press release from Barr Here)

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