Teva agrees to concessions as part of European Commission approval for purchase of Allergan's generics business

Teva on Thursday announced that the European Commission cleared its $40.5-billion purchase of Allergan's global generics business. As part of the approval, Teva agreed to divest certain overlapping molecules in 24 European countries, while the Israeli drugmaker will also sell the "majority" of Allergan's current generic operations in the UK and Ireland.

The European Commission said it had "concerns that the merged entity would have faced insufficient competition from the remaining players for a number of generic pharmaceuticals, as well as regarding the overall generics business in the UK, Ireland and Iceland," adding "the commitments offered by the companies address these concerns."

Specifically, the business divested by Teva in the UK and Ireland will have the capacity to manufacture and market generic drugs. Meanwhile, the remainder of Allergan's UK and Ireland generic business will be integrated with Teva's operations in accordance with the global transaction. In Iceland, Teva will retain Allergan's generic business while divesting its own.

Commenting on the news, Bloomberg Intelligence analyst Jennifer Rie said "antitrust reviews of Teva's agreement to acquire Allergan's global generic-drug business may soon be complete." Rie noted that similarly as in Europe, "divestitures will likely be needed for US antitrust clearance," adding "Teva has indicated it's talking with potential buyers for assets it may have to sell."

Teva stated that it will continue to work with the US Federal Trade Commission to ensure regulatory clearance of the transaction. The deal was unconditionally cleared by regulators in Brazil in December last year.

Meanwhile, Allergan previously entered into a definitive merger agreement with Pfizer valued at $160 billion. The transaction has been reported to be contingent on Teva completing its purchase of Allergan's global generic business (for related analysis, see ViewPoints: Allergan impresses, but investors remain cautious towards Pfizer deal).

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