Perrigo Company (NYSE:PRGO; TASE:PRGO) may be a suitable acquisition for Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA), according to a report by “Bloomberg” today. According to the report’s authors, Teva will have to jump on the acquisition bandwagon soon, in part because of increased competition with cheaper generics companies - competition that will begin eroding Teva’s profits already this year.
Expiring patents and slowed growth are not unique to Teva, but while the Israeli pharmaceutical company did not make any significant acquisitions in 2014, acquisitions totaled $234 billion in pharmaceutical industry for the year globally.
Why Perrigo? The Bloomberg article explains that Teva plans to expand in the field of over-the-counter remedies (OTC), and Perrigo may be a good match. Another acquisition candidate mentioned in the article is Sweden’s Meda AB.
“Investors have seen what these deals are doing to the share prices” of other acquirers, Gabelli & Co. analyst Kevin Kedra told “Bloombers.” “Teva has a healthy business, but in this environment if you’re not doing deals, you’re probably not taking advantage of the opportunities that are out there.”
Last month, New York-based Royal Bank of Canada analyst Randall Stanicky wrote in a report that if Teva were to acquire Perrigo, it would boost Teva’s growth rate and reduce its exposure to Copaxone. Stanicky further estimated that a deal financed 80 percent with cash and 20% in stock would drive an increase of 30% in Teva’s share price.
Published by Globes [online], Israel business news - www.globes-online.com - on January 12, 2015
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