Teva Pharmaceutical said Friday it will buy rival generic drug company Barr Pharmaceuticals for more than $7 billion in a move that will boost Teva’s dominance as the world’s biggest generic drugmaker.
Israel-based Teva Pharmaceutical Industries Ltd. said acquiring Montvale, N.J.-based Barr Pharmaceuticals Inc., the world’s No. 4 generic drug maker, will also expand its presence in U.S. and Eastern European markets.
Barr shares jumped by double digits on the news.
Barr shareholders will receive $39.90 in cash and 0.6272 of a Teva American Depositary Receipt for each share they own, or a total purchase price of $66.50 per share. That represents a 16 percent premium to Barr’s $57.17 closing price Thursday. Teva also is offering to assume $1.5 billion of Barr’s debt.
The deal is expected to close at the end of this year, and Teva said it should bring $300 million in annual cost savings within three years and add to its profit within four quarters after the deal closes.
Barr shares finished at $46.82 Wednesday, before reports that a deal was in the works sent the stock climbing 22 percent.
Already the largest generic drug maker in the world, Teva reported $9.4 billion in sales in 2007. Barr posted $2.5 billion in revenue, and the company describes itself as the largest maker of oral contraceptives in the U.S.
Besides many popular generic contraceptives, Barr sells its brand-name Seasonique, which limits menstrual periods to four times per year. And it began selling a generic version of Bayer AG’s birth-control pill Yasmin, touted as providing shorter, lighter periods with less cramping, in the U.S. in July.
Barr also has the rights to sell a generic version of the attention deficit hyperactivity disorder drug Adderall XR starting April 1, 2009.
The deal will give Teva a larger presence in Central and Eastern Europe.
“The acquisition of Barr will elevate Teva’s market leadership to a new level,” Shlomo Yanai, its chief executive officer, said in a statement.
Based on Barr’s 108.1 million shares outstanding at April 28, the deal is valued at $7.19 billion before assumed debt. In a statement, the companies valued the deal at $7.46 billion before debt.
Together, the two companies have more than 500 products on the market, as well as more than 200 applications pending in the U.S. to sell generic versions of brand-name drugs with combined sales exceeding $120 billion a year. The combined company will have about 37,000 employees and operations in more than 60 countries.
The boards of both companies have approved the deal, but approval is still needed from Barr stockholders and various regulators in North America and Europe.