March 18, 2010 12:48 PM EDT
Israel's Teva has won the battle for German generic drugmaker Ratiopharm, paying an enterprise value of 3.625 billion euros to fix the industry leader's weakness in the world's second-largest generics market.
Teva, which beat U.S. drugs powerhouse Pfizer and Iceland's Actavis in the race for Ratiopharm, said the combined company would have had 2009 revenues of $16.2 billion, up from Teba's own sales of $13.9 billion.
Put on the auction block by Germany's Merckle family as its business empire crumbled, Ratiopharm vies with Stada for second place among Germany's generics makers, trailing Swiss drug major Novartis's NOVN.V Hexal business.
None of the other companies have yet commented on the deal.
Trade in Teva shares, Israel's largest company, with a market value of about $57 billion, was halted until 1220 GMT, having risen 1.78 percent to 228.5 shekels after sources broke the story.
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Before Teva put out its statement, Ratiopharm owner VEM had called a news conference for 1300 GMT to announce what is the biggest takeover of a copycat drugmaker since Teva's $7.5 billion purchase of U.S. rival Barr, announced in July 2008.
Ratiopharm's last three suitors, whittled down from about a dozen in November, had until Thursday to submit final bids, several sources had said.
Teva, number four in Germany's generics market, will jump straight to the top spot with Ratiopharm in its stable.
"It's a very good fit for Teva, and the market will view it positively," said Gilad Sarig, an analyst at Bank Hapoalim. "Teva would have liked to get it for less, but it had competitors."
Analysts at Credit Suisse have said a takeover would move Teva's global generics market share to around 19 percent, widening the gap over No. 2, Novartis's Sandoz unit, at about 11 percent.
SYNERGIES
Potential synergies that Teva may capture could be at least in the $100-$150 million range, said Jefferies analyst David Windley in a Feb. 4 note.
The deal would also reduce Teva's reliance on Copaxone, the most commonly used multiple sclerosis drug, which accounts for 20 percent of group sales. "We anticipate Teva would be able to achieve manufacturing/raw material synergies as well as tax advantages from Ratiopharm," JP Morgan analyst Chris Schott wrote in a March 8 research note.
The deal could add 3-5 percent to earnings per share in the long term, Schott said, assuming then that the deal would cost Teva about 3 billion euros.
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