Impax to Buy Allergan, Teva Drug Portfolio for $586 Million

  • California company will add 15 generic drugs with deal
  • Shares fall 12 percent in trading, most since February

Impax Laboratories Inc. will buy a portfolio of drugs from Teva Pharmaceutical Industries Ltd. and Allergan Plc for $586 million as the two larger pharmaceutical companies divest products to gain antitrust approval for their own deal.

The Hayward, California-based company will add 15 generic drugs that are already for sale and others that are in development. The drugs generated $150 million in net revenue and about $100 million in gross profit last year, Impax said in a statement announcing the deal.

Impax fell by as much as 12 percent Tuesday, the biggest intraday drop since Feb. 22, and was down 8.7 percent to $29.19 at 10:12 a.m. in New York.

Teva and Allergan have been selling off assets to facilitate Teva’s $40.5 billion purchase of Allergan’s generics business, which the companies have said will close by the end of this month. Earlier this month, Dr. Reddy’s Laboratories Ltd. agreed to buy generic products from the two companies for $350 million in cash. Antitrust regulators are requiring the divestitures as a condition of approving the Teva-Allergan deal.

“Through this transaction, we will be expanding our portfolio of difficult-to-manufacture or limited-competition products,” Impax Chief Executive Officer Fred Wilkinson said in the statement. “We will be well positioned to continue to invest in organic growth as well as judiciously pursue strategic business development and merger and acquisition opportunities.”

Raised Forecast

Impax raised its financial forecast, saying that adjusted earnings per share will increase by 20 percent this year, compared with its prediction in May of at least 10 percent. It didn’t increase its projections for sales, which it expects will rise by at least 15 percent. Revenue last year was $860.5 million. 

The drugmaker will fund the deal with cash and about $400 million in loans. Sullivan & Cromwell LLP and McDermott Will & Emery LLP acted as Impax’s legal advisers, and RBC Capital Markets is providing financing. Greenhill & Co. was Teva’s financial adviser and Kirkland & Ellis LLP was legal adviser.

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