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Teva outbids Valeant to acquire Cephalon

Posted on 03 May 2011

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Cephalon have accepted a bid from Teva which values the company at $6.8 billion, some $1.1 billion more than the Valeant offer of several weeks ago.

The accepted offer brings to an end what looked like becoming a protracted and increasingly hostile exchange between Valeant and Cephalon management.

Whilst Cephalon always took the stance that the Valeant offer was unwelcome and undervalued the business, it effectively put Cephalon up for auction. As a result Cephalon had little choice but to seek out a white knight.

See Valeant offer for Cephalon here.

That white knight has appeared in the form of Teva.

The Boards of Directors of both companies unanimously approved the agreement under which Teva will acquire all of the outstanding shares of Cephalon for $81.50 per share in cash, or a total enterprise value of approximately $6.8 billion.

“Cephalon's merger with Teva is the result of a rigorous process that included a review of a wide-range of strategic options undertaken by Cephalon's Board of Directors and management team to maximize value and deliver significant returns to shareholders,” said Kevin Buchi, Chief Executive Officer of Cephalon. “By joining forces with Teva, we will benefit from their scale, worldwide reach and operational excellence, allowing us to further pursue our shared goals of delivering new, innovative therapies to help patients around the world. Teva shares our strong commitment to R&D, and we believe our pipeline will thrive under their leadership. We look forward to working with the Teva team to ensure a smooth transition and complete the transaction as expeditiously as possible.”

The combined company’s sizable branded portfolio represents approximately $7 billion in sales, with a robust pipeline including more than 30 late-stage compounds. The transaction will create immediate and sustainable value in niche therapeutic areas including CNS, oncology, respiratory and pain management. The combined company will become a leader in specialty pharma.

The purchase price of $81.50 per share represents a 39% premium to Cephalon’s stock price on March 29, 2011, the last closing price before the unsolicited proposal was announced; a premium of 44% to Cephalon’s average closing stock price over the last 30 trading days prior to the unsolicited proposal; a 12% premium to the unsolicited proposal of $73.00 per share; and a premium of 6% to Cephalon’s closing stock price on April 29, 2011, the last trading day prior to today’s announcement.

Steve Poile

 

Related items:

Purchase the Dealdoc
View the deal terms
See this deal on the 2011 M&A Scorecard
View this deal and thousands more at Current Agreements (subscription required)

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