Teva Pharmaceutical Industries Ltd. (NASDAQ: TEVA) and Cephalon,
Inc. (NASDAQ: CEPH) today announced that their Boards of Directors
have unanimously approved a definitive 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. The transaction is not conditioned on financing and
is expected to be completed in the third quarter of 2011.
The transaction reinforces Teva’s long term strategy of building
out its branded and specialty pharmaceuticals business through
diversification and expansion of the company’s product portfolio
and pipeline. The combined company will utilize its complementary
commercial, R&D and operational capabilities. It will capture
value by providing customers with a broad spectrum of specialty
branded products. 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.
“We are embarking today on a new and exciting future for Teva’s
branded business, and we are delighted that we will be working
together with the Cephalon team,” said Shlomo Yanai, President and
Chief Executive Officer of Teva. “This is transforming for Teva’s
branded business, as it will help us to deliver on our strategic
goal of creating a diversified, multi-faceted company. We have been
following Cephalon for a long time and are very happy with the
opportunity to join forces. Our significantly broader portfolio
will permit marketing and sales synergies and enhance
profitability. We look forward to welcoming our colleagues at
Cephalon to the Teva family.”
“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.”
Price and Premiums
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. The transaction is expected to
be immediately accretive to Teva’s non-GAAP earnings per share and
accretive to Teva’s GAAP earnings within the fourth quarter of
closing.
Strategic and Financial Benefits of the Transaction
- Diversifies Teva’s Branded Portfolio
and Provides Access to New Therapeutic Segments: Together Teva
and Cephalon will offer broad market appeal across the pharma
spectrum with products that are highly complementary. As a result
of the transaction, Teva will expand and diversify its marketed
products in CNS, and will add commercial presence in oncology and
pain management. The combined company will have more than 20
branded products, with pro forma branded sales of approximately $7
billion.
- Provides Attractive and Highly
Complementary Pipeline with Significant Value: Cephalon’s
attractive pipeline of late-stage products enhances Teva’s pipeline
in key therapeutic areas including CNS, oncology, and respiratory,
and expands into new areas such as pain management. The combined
company will have more than 30 compounds in late-stage development,
including three products in filing stage. The pipeline has a long
patent life and is well positioned for future growth and
success.
- Enhances Branded Commercial and
R&D Capabilities: Teva will benefit from Cephalon’s brand
expertise, infrastructure and talent in specialty pharma. Teva and
Cephalon share complementary commercial and R&D capabilities,
with proven teams of talented employees with experience in bringing
products to market.
- Delivers Significant Synergies:
By taking advantage of the best of both companies, Teva expects to
realize annual cost synergies of at least $500 million in year
three following the transaction’s close.
- Accretive to Earnings: The
transaction is expected to be immediately accretive to Teva’s
non-GAAP earnings per share and accretive to Teva’s GAAP earnings
within the fourth quarter of closing.
- Enhances Global Generic
Footprint: With Mepha, Teva will benefit from the #1 generics
company in Switzerland with a geographic presence in CEE, Africa
and Latin America. Mepha provides Teva with a presence in high
growth emerging markets.
- Reinforces Teva’s Long Term
Strategy: The transaction reinforces Teva’s long term strategy
to drive increased diversification across business units, products
and geographies. The combined company’s broad product portfolio is
expected to support Teva in achieving its stated goal of growing
its branded revenues from $4.6 billion in 2010 to over $9 billion
in 2015.
Financing and Approvals
The transaction has no financing condition. Teva intends to
finance the transaction through cash on hand, lines of credit and
the public debt market.
The transaction is subject to the satisfaction of customary
closing conditions, including expiration of the waiting period
under the Hart-Scott-Rodino Antitrust Improvements Act and
clearance by the European Commission under the EC Merger
Regulation, as well as the approval of Cephalon stockholders. The
transaction is expected to be completed in the third quarter of
2011.
Advisors
Credit Suisse Securities (USA) LLC is serving as Teva’s
financial advisor, and Kirkland & Ellis LLP is serving as its
legal counsel. Deutsche Bank Securities Inc. and BofA Merrill Lynch
are serving as Cephalon’s financial advisors, and Skadden, Arps,
Slate, Meagher & Flom LLP is serving as its legal counsel.
Conference Call and Webcast
Teva and Cephalon will host a conference call to discuss the
transaction today at 8:30 AM EDT. The number to call within the
United States is 866-713-8566 or 617-597-5325 internationally,
using participant code 35520320. The webcast and accompanying slide
presentation can be accessed through the companies’ websites at
www.tevapharm.com and www.cephalon.com. A replay of the conference
call will be available beginning at 11:30 AM EDT on May 2, 2011
through 12:00 AM EDT on May 9, 2011 and can be accessed by dialing
888-286-8010 in the United States or 617-801-6888 internationally,
using participant code 91469265.
About Teva
Teva Pharmaceutical Industries Ltd. (NASDAQ:TEVA) is a leading
global pharmaceutical company, committed to increasing access to
high-quality healthcare by developing, producing and marketing
affordable generic drugs as well as innovative and specialty
pharmaceuticals and active pharmaceutical ingredients.
Headquartered in Israel, Teva is the world's largest generic drug
maker, with a global product portfolio of more than 1,450 molecules
and a direct presence in about 60 countries. Teva's branded
businesses focus on neurological, respiratory and women's health
therapeutic areas as well as biologics. Teva's leading innovative
product, Copaxone®, is the number one prescribed treatment for
multiple sclerosis. Teva employs approximately 40,000 people around
the world and reached $16.1 billion in net sales in 2010.
About Cephalon
Cephalon is a global biopharmaceutical company dedicated to
discovering, developing and bringing to market medications to
improve the quality of life of individuals around the world. Since
its inception in 1987, Cephalon has brought first-in-class and
best-in-class medicines to patients in several therapeutic areas.
Cephalon has the distinction of being one of the world's
fastest-growing biopharmaceutical companies, now among the Fortune
1000 and a member of the S&P 500 Index, employing approximately
4,000 people worldwide. The company sells numerous branded and
generic products around the world. In total, Cephalon sells more
than 170 products in nearly 100 countries. More information on
Cephalon and its products is available at
http://www.cephalon.com.
Additional Information:
This communication may be deemed to be solicitation material in
respect of the proposed acquisition of Cephalon, Inc. (the
"Company") by Teva Pharmaceutical International Ltd. (“Teva”). In
connection with the proposed acquisition, Teva and the Company
intend to file relevant materials with the Securities and Exchange
Commission (the "SEC"), including the Company’s proxy statement on
Schedule 14A relating to the transaction.
INVESTORS OF THE COMPANY ARE URGED TO READ THE COMPANY’S PROXY
STATEMENT RELATING TO THE TRANSACTION, AND ANY OTHER RELEVANT
DOCUMENTS THAT THE COMPANY MAY FILE WITH THE SEC WHEN THEY BECOME
AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
Investors and security holders will be able to obtain such
documents free of charge through the website maintained by the SEC
at www.sec.gov, at the Company's website at
http://www.cephalon.com, or by contacting Innisfree M&A
Incorporated at (877) 800-5186 (banks and brokers call collect at
(212) 750-5833).
The Company and its directors and certain executive officers,
may be deemed to be participants in the solicitation of proxies
from the holders of the Company’s common stock in respect of the
proposed transaction. Information about the directors and executive
officers of the Company and their respective interests in the
Company by security holdings or otherwise is set forth in its proxy
statement relating to the 2011 annual meeting of stockholders,
which was filed with the SEC on March 25, 2011. Investors may
obtain additional information regarding the interest of the
participants by reading the proxy statement relating to the
transaction when it becomes available.
Forward-Looking Statements
Teva’s Safe Harbor Statement under the U. S. Private
Securities Litigation Reform Act of 1995: The statements,
analyses and other information contained herein relating to the
proposed acquisition and its effects on financial and operating
performance, including estimates for growth, anticipated positions
in certain markets and shares in such markets, the markets for Teva
and Cephalon’s products, trends in Teva and Cephalon’s operating
and financial results, the future development and operation of Teva
and Cephalon’s business, and the contingencies and uncertainties to
which Teva and Cephalon may be subject, as well as other statements
including words such as “anticipate,” “believe,” “plan,”
“estimate,” “expect,” “intend,” “will,” “should,” “may” and other
similar expressions, are “forward-looking statements” under the
Private Securities Litigation Reform Act of 1995. Such statements
are made based upon management's current expectations and beliefs
concerning future events and their potential effects on the company
and involve a number of known and unknown risks and uncertainties
that could cause our future results, performance or achievements to
differ significantly from the results, performance or achievements
expressed or implied by such forward-looking statements. Actual
results may differ materially from the results anticipated in these
forward-looking statements. Important factors that could cause or
contribute to such differences include whether and when the
proposed acquisition will be consummated and the terms of any
conditions imposed in connection with such closing, our ability to
rapidly integrate Cephalon’s operations and achieve expected
synergies, diversion of management time on merger-related issues,
our ability to predict future market conditions with accuracy, our
ability to develop and commercialize additional pharmaceutical
products, competition from the introduction of competing generic
equivalents and due to increased governmental pricing pressures,
the effects of competition on sales of our innovative products,
especially Copaxone® (including competition from innovative
orally-administered alternatives as well as from potential generic
equivalents), potential liability for sales of generic products
prior to a final resolution of outstanding patent litigation,
including that relating to the generic versions of Neurontin®,
Lotrel® and Protonix®, the extent to which we may obtain U.S.
market exclusivity for certain of our new generic products, the
extent to which any manufacturing or quality control problems
damage our reputation for high quality production and require
costly remediation, , our ability to identify, consummate and
successfully integrate acquisitions (including the acquisition of
Cephalon), our ability to achieve expected results through our
innovative R&D efforts, dependence on the effectiveness of our
patents and other protections for innovative products, intense
competition in our specialty pharmaceutical businesses,
uncertainties surrounding the legislative and regulatory pathway
for the registration and approval of biotechnology-based products,
our potential exposure to product liability claims to the extent
not covered by insurance, any failures to comply with the complex
Medicare and Medicaid reporting and payment obligations, our
exposure to currency fluctuations and restrictions as well as
credit risks, the effects of reforms in healthcare regulation and
pharmaceutical pricing and reimbursement, adverse effects of
political or economical instability, major hostilities or acts of
terrorism on our significant worldwide operations, increased
government scrutiny in both the U.S. and Europe of our agreements
with brand companies, interruptions in our supply chain or problems
with our information technology systems that adversely affect our
complex manufacturing processes, the impact of continuing
consolidation of our distributors and customers, the difficulty of
complying with U.S. Food and Drug Administration, European
Medicines Agency and other regulatory authority requirements,
potentially significant impairments of intangible assets and
goodwill, potential increases in tax liabilities resulting from
challenges to our intercompany arrangements, the termination or
expiration of governmental programs or tax benefits, any failure to
retain key personnel or to attract additional executive and
managerial talent, environmental risks and other factors that are
discussed in our filings with the SEC.
Cephalon’s Safe Harbor Statement under the U. S. Private
Securities Litigation Reform Act of 1995:
In addition to historical facts or statements of current
condition, this press release may contain forward-looking
statements. Forward-looking statements provide Cephalon’s current
expectations or forecasts of future events. These may include
statements regarding anticipated scientific progress on its
research programs, development of potential pharmaceutical
products, interpretation of clinical results, prospects for
regulatory approval, manufacturing development and capabilities,
market prospects for its products, sales and earnings guidance, and
other statements regarding matters that are not historical facts.
You may identify some of these forward-looking statements by the
use of words in the statements such as “anticipate,” “estimate,”
“expect,” “project,” “intend,” “plan,” “believe” or other words and
terms of similar meaning. Cephalon’s performance and financial
results could differ materially from those reflected in these
forward-looking statements due to general financial, economic,
regulatory and political conditions affecting the biotechnology and
pharmaceutical industries as well as more specific risks and
uncertainties facing Cephalon such as those set forth in its
reports on Form 8-K, 10-Q and 10-K filed with the SEC. Given these
risks and uncertainties, any or all of these forward-looking
statements may prove to be incorrect. Therefore, you should not
rely on any such factors or forward-looking statements.
Furthermore, Cephalon does not intend to update publicly any
forward-looking statement, except as required by law. The Private
Securities Litigation Reform Act of 1995 permits this
discussion.
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