Analysts are weighing in the news that Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA) is in talks to acquire Barr Pharmaceuticals Inc. (NYSE: BRL).
IBI Investment House analyst Noa Weissberg says, "Teva's strategic plan now becomes irrelevant, because it makes no mention of large acquisitions, and Barr is a large acquisition. There is clear synergy in expanding product lines and the geographical footprint, and there's no doubt that the acquisition will strengthen Teva in the long run. However, the price tag and form of payment will be important."
Psagot Investment House analyst Limor Gruber says, "The acquisition multiples are not unusual if we look at other deals in the industry. The advantages of an acquisition include the removal of a major competitor in the market, Barr's substantial business in Central and Eastern Europe, its strong positioning in the oral contraceptives market, and a strengthening of biogeneric activity."
Leader Capital Markets analyst Yoav Burgan says, "The multiples of the deal are in line with the current quite high multiples characteristic in generic medicine. The acquisition will widen the gap between Teva and Sandoz in the US, and will boost Teva's presence in Eastern Europe. Barr's management is experienced and top quality. To finance the deal, Teva will have to increase its leverage and make a major dilution in its current shareholders' holdings."
Clal Finance Batucha analyst Gal Reiter says, "Barr is attractive to Teva because it specializes in a number of niches, especially contraceptives. It also has generic activity in Europe, where Teva is seeking opportunities for a rapid entry into the market. An acquisition of Barr will also diversify Teva's revenue sources because Barr also has brand drugs. It's possible that the acquisition is essential and underscores worries about loss of revenue from Copaxone."
UBS analyst Ricki Goldwasser says, "A potential acquisition of Barr would provide Teva with access to the oral contraceptive market (Barr accounts for about 21% of total market, based on IMS), add to its FDA Paragraph IV filings (Teva has 88 Paragraph IVs pending and Barr has 25 Paragraph IVs pending), enhance Teva's presence in Central and Eastern Europe (we estimate that 9.4% of Barr's revenue, $240 million and 4.5% of Teva's revenue, or $450-500 million is from this region), and an opportunity to eliminate duplicate infrastructure in the US."
Published by Globes [online], Israel business news - www.globes-online.com - on July 17, 2008
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