Teva to buy Barr Pharma for more than $7 billion

The deal continues consolidation of the generic-drug sector, driven by growth prospects as governments and other payers turn to the lower-priced medications and by the impending expiration of brand-name drug patents worth billions of dollars a year.

Israel-based Teva Pharmaceutical Industries Ltd. said acquiring Montvale, N.J.-based Barr Pharmaceuticals Inc., the world's No. 4 generic drug maker, will also expand its presence in U.S. and other key markets, from Russia to Eastern and Central Europe.

Analysts called the deal a great comination for both companies, and Barr shares jumped by double digits on the news.

"This was the 12th attempt to acquire Barr, and the third by Teva," Barr's chief executive, Bruce Downey, told analysts during a conference call. "This is the right price, the right time and the right opportunity."

Barr shareholders will receive $39.90 in cash and 0.6272 of a Teva American Depositary Receipt for each share they own, a total of $66.50 per share. Teva also is offering to assume $1.5 billion of Barr's debt.

Barr shares finished at $46.82 Wednesday, before reports a deal was in the works sent the stock up 22 percent.

The deal is expected to close at the end of this year. Teva said it should bring $300 million in annual savings within three years and add to profits within a year.

Shlomo Yanai, Teva's CEO, said the two companies have minimal overlap in products and that Barr would add to his company's products and research pipeline, particularly in women's health.

"I cannot imagine a company that could be a better fit with Teva, our business, our people, our values," Yanai said.