Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA) and Barr Pharmaceuticals Inc. (NYSE: BRL) today announced that Barr and its syndicate, arranged by Bank of America (NYSE: BAC), have agreed to amend Barr's unsecured credit facilities to permit them to remain in place following Barr's acquisition by Teva. Teva expects to close the takeover by the end of the year.
Teva CFO Eyal Desheh said, "We are pleased that we have successfully negotiated with Barr's lenders to maintain these credit facilities, post-closing, under terms and conditions that meet our requirements. The combination of the amended Barr credit facilities, Teva's available cash on hand and our committed bridge financing will provide us with sufficient funds to complete the acquisition of Barr as well as support the continued growth of our business."
The banks waived their right to call Barr’s debt upon the change in control in connection with the acquisition by Teva, thereby allowing Barr's outstanding obligations under the credit facilities to remain in place following the closing of the acquisition. The facilities have outstanding balances of $1.65 billion, which matures in October 2011, and $292 million, which matures in June 2013. Barr also has an unused $300 million revolving credit facility. Teva will guarantee the borrowers' obligations when it completes the acquisition.
Barr EVP and CFO Bill McKee said, "We appreciate the support our bank group has provided Barr over the years and view their willingness to agree to this amendment as further evidence of the strength of this combination."
UBS published an update on Teva following the news. UBS analyst Ricky Goldwasser reiterated his "Buy" recommendation and $54 target price for Teva. Teva fell 2.4% on Nasdaq yesterday to $37.78. He predicts that the news will give a boost to Teva's share, since concerns about financing of the Barr deal were weighing on the share.
Goldwasser also noted that Teva confirmed that it now has the funds to complete the $7.5 billion takeover, after obtaining a $1 billion bridge loan from Bank Hapoalim (TASE: POLI; LSE:80OA) and $750 million from Bank Leumi (TASE: LUMI).
Goldwasser added that the next events will be the publication of Teva and Barr's financial reports for the third quarter next week, approval of the deal by the US Federal Trade Commission, which he expects will result in a limited number of product divestures, and the vote by Barr's shareholders, due on November 21.
Published by Globes [online], Israel business news - www.globes-online.com - on October 28, 2008
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