Teva buys Cephalon for $6.8B US

Teva Pharmaceutical Industries said Monday it planned to buy Cephalon Inc. for $6.8 billion US in a move that beats out a hostile bid from Toronto-based Valeant Pharmaceuticals.

The deal gave Teva, the world's largest generic drug developer, a range of biotechnology drugs aimed at cancer and other conditions.

Teva, based in Israel, said it will pay $81.50 per share, a 5.8-per cent premium over Cephalon's closing price on Friday.

The price was 12 per cent above the $73-per share offer which Valeant made on March 29, and a 39-per cent premium over Cephalon's price before Valeant's offer.

Valeant withdraws

A few hours after Teva's announcement, Valeant said it would withdraw its bid.

"We believe that this announcement is positive news for Cephalon stockholders and we are pleased that Teva has paid what we believe is a very full value for the company and as a result, have withdrawn our consent solicitation," Valeant CEO Michael Pearson said in a statement.

"As Cephalon stockholders ourselves with over a million shares owned, we will benefit from this transaction without participating further in the process."

Valeant could receive a $81.5 million payout from the deal — and while only a portion of that is a profit after factoring in what it paid for the shares and the cost of the bid, the company will have some extra cash that it can use to pursue other takeover opportunities in the highly competitive pharmaceutical industry, said Laurie Little, a spokeswoman for Valeant.

The Teva and Cephalon boards have each approved their proposed deal, which is expected to close during the third quarter.

Cephalon shares closed up $3.12 US, or 4.1 per cent, to $80.14 on the Nasdaq.

The combined company would have a portfolio of branded drugs with $7 billion in annual sales and more than 30 potential products in late-stage development.