Teva tops Valeant offer to agree $7bn bid for specialty pillmaker Cephalon

TEVA Pharmaceutical Industries has agreed a deal to buy US specialty drugmaker Cephalon for nearly $7bn (£4.2bn), topping an unsolicited bid by Canada’s Valeant Pharmaceuticals International and boosting its brand-name business.

Teva’s $81.50-a-share deal is a nearly 12 per cent premium over Valeant’s $73-a-share offer, which Valeant made public on 29 March.

Israel-based Teva is best known as the world’s largest maker of generic drugs, but it also has a significant business selling brand medicines that have patent protection.

Adding Cephalon’s pain, sleep and cancer drugs will help Teva reduce its dependence on its big-selling Copaxone multiple sclerosis medicine, which faces increasing competitive threats.

The deal is not conditioned on financing and is expected to be completed in the third quarter, the companies said. Teva expects the deal to immediately add to its non-GAAP earnings per share.

The transaction is worth $6.8bn, including the conversion of Cephalon’s convertible debentures and stock options.

Cephalon had urged shareholders to rebuff Valeant’s approach, and shares had been trading above the Canadian company’s offer.

Cephalon shares rose 5.8 per cent to $81.52 in premarket trading. Teva shares rose three per cent after the announcement.

Cephalon chief executive Kevin Buchi said the deal with Teva followed a review of a wide range of strategic options.