Teva Pharmaceutical Industries has swooped in to grab Cephalon away from prospective buyer Valeant Pharmaceuticals. The Israel-based generics giant has agreed to pay $6.8 billion for Cephalon, best known for its sleep-disorder drugs Provigil and Nuvigil. The $81.50-per-share offer beats Valeant's $73 hostile bid by almost 12 percent.
The boards of both companies have approved the deal, which will add to Teva's small stable of branded drugs and help offset revenues lost to generic competition for its multiple sclerosis treatment Copaxone. As Bloomberg notes, with Cephalon's drugs, Teva would boast $7 billion a year in branded sales. The company would also have two blockbusters to its credit, Copaxone and Cephalon's Provigil.
Teva is also looking for cost savings from the deal, the New York Times reports. The company says it can squeeze $500 million in costs out of the combined companies, and that it expects the purchase to add to earnings immediately. One area Teva will be looking to economize is marketing, CEO Shlomo Yanai said in a statement. "Our significantly broader portfolio will permit marketing and sales synergies and enhance profitability," he said.
The Israeli company has been buying up companies and products as part of its long-term strategy to be a $31 billion company by 2015. Teva snapped up German generics maker Ratiopharm last year for $5 billion, thus becoming the biggest generics maker in Europe. CFO Eyal Desheh told Bloomberg in February that the company was ready for another Ratiopharm-sized deal and that it was eyeing several potential targets.