Teva is to acquire Cephalon for $6.8 billion in cash, or $81.50 per share. The deal has been approved by both firms’ boards and must therefore represent something of a smack in the face for Valeant, which since March has been trying to persuade Cephalon and its shareholders to accept its $73 per share, $5.7 billion acquisition bid.
The $81.50 per share deal with Teva represents a 39% premium on Cephalon’s stock price on March 29, the last trading day before the Valeant proposal was first announced, and a 6% premium on Cephalon’s share price on April 29. The approved merger of Cephalon into Teva will result in a combined firm with a branded portfolio of over 20 products worth $7 billion in combined annual sales and a late-stage clinical pipeline of over 30 compounds.
Israel-based Teva says the deal will expand its marketed CNS portfolio, provide it with a new oncology and pain management franchise, and boost its pipeline in the CNS, oncology, and respiratory fields. The firm projects being able to realize annual cost synergies of about $500 million in the third year after the transaction is finalized.
“This is transforming for Teva’s branded business, as it helps us to deliver on our strategic goal of creating a diversified, multifaceted company,” states Shlomo Yanai, Teva president and CEO. “Our significantly broader portfolio will permit marketing and sales synergies and enhance profitability.”
The acquisition follows an acquisition spree by Cephalon itself. In March the board of cancer drugs specialist ChemGenex Pharmaceuticals recommended that its shareholders accept Cephalon’s $163 million offer to acquire the majority holding in the firm that it doesn’t already own. Just a week before that, Cephalon inked a $225 million cash deal to take over cancer drugs firm Gemin X.