. "We expect to close the Allergan deal in June, and hope and believe we will obtain approval for it, but it takes a great deal of time for the US Federal Trade Commission (FTC) to check it," said Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) CFO Eyal Desheh, referring to Teva's giant acquisition of Allergan's generic division. He was speaking at an Oppenheimer investment bank conference today in Tel Aviv.
Teva announced its $40.5 billion acquisition in July 2015. The delays in completing the deal and the prolonged downtrend in the pharma share prices have recently aroused doubts about the deal in the market, but Teva continues to express confidence and calm in this matter. Desheh said that Teva expected synergy from the acquisition amounting to $1.4 billion within three years.
The FTC is demanding that Teva sell product lines worth $1.1 billion in which its business overlaps with that of Allergan. "We can get a great deal of money for these products, and negotiations with a number of companies have reached a very advanced stage," Desheh explained.
As part of financing for the deal, Teva raised $7.2 billion in a share offering in late 2015. "We did it at the right time," said Desheh. Since that time, the Teva share has lost 17% of its value. The company finished the first quarter with $10 billion in debt. "The Allergan deal will obviously change this picture, but we are now in one of the strongest positions we have had in recent years," Desheh said.
"We believe in Mylan as a strategic investment"
Teva does not rule out additional acquisitions. "We'll continue carefully choosing new acquisition deals for business development," Desheh declared. Asked whether Teva would buy back its shares, in view of the decline in its share price, Desheh answered, "When acquisition possibilities come, you have to be ready. A company has to be reached at all times to exploit opportunities if they are really suitable, but we're checking all the possibilities for using capital. We haven't abandoned the idea of buying back shares."
Where acquisitions were concerned, Desheh said that Teva was concentrating on building an innovative pipeline of branded drugs and expanding its business in emerging markets. One acquisition that did not go through was Mylan N.V. (Nasdaq: MYL; TASE: MYL). As part of its attempted takeover, Teva spent $1.6 billion on buying Mylan shares, and as of the end of the first quarter, had lost $600 million on the value of its investment.
Commenting on these events, Desheh said, "We didn't buy the shares as a financial investment. It was part of the strategy for closing the deal, and in the end, we went elsewhere. I believe in Mylan we planned to pay $82 a share, and it's half of that now. We'll hold the shares until the time comes. It's not a long-term investment. We have no wish to be active there, and we'll find a way to sell when the price reaches what we think is right."
According to Desheh, "We're building a new Teva. It's evolution, not revolution, but the company is moving in the direction of becoming one of the leading companies in the world in the development and sale of drugs, with a broader perspective of the health we all consume. We're working to strengthen our business infrastructure and financial profile, diversify sources of income and profit, build a unique pipeline, and make Teva diverse and powerful company."
Published by Globes [online], Israel business news - www.globes-online.com - on May 22, 2016
© Copyright of Globes Publisher Itonut (1983) Ltd. 2016