Aurobindo vies for up to $1.5 billion in assets Teva divesting in Europe: report

According to people familiar with the matter, Aurobindo is among the companies considering a bid to buy assets potentially worth about $1.5 billion that Teva is looking to divest in the UK, Ireland and Iceland as a precondition to its planned $40.5-billion acquisition of Allergan's global generic drug business, Bloomberg reported. The sources indicated that a buyer for the Teva portfolio could emerge in the next few weeks.

One of the people suggested Aurobindo would finance the deal with a loan of more than $1 billion, although the sources noted that no final decision has been made and the Indian drugmaker could still decide against pursuing a bid. Aurobindo declined to comment on the rumours, while Teva spokesman Yonatan Beker said "we are not in a position to confirm who any potential bidders are, nor to comment on market speculation on sale values." However, Beker stated that Teva is being advised "on the divestment of certain UK and Ireland assets following the remediation package agreed with the EU Commission in March."

Commenting on the news, PhillipCapital analyst Surya Patra said any acquisition that Aurobindo "would be doing at this point would put some pressure on the balance sheet, [and] there would be some concern about that." Daljeet Singh, head of equity at IndiaNivesh, suggested "it isn't a bright idea for Aurobindo to go for any acquisition," given that the drugmaker has yet to consolidate its 2014 acquisition of certain commercial operations in Europe from Actavis, "and investors have been waiting to see the benefits of a consolidation." 

Meanwhile, Teva and Allergan agreed last month to sell "a broad portfolio" of generic products, including 15 currently sold generics and multiple drugs in the pipeline, to Impax Laboratories for a total of about $586 million. That transaction, as well as recent deals with Dr. Reddy's Laboratories, Sagent Pharmaceuticals and Mayne Pharma, was part of the divestiture process ordered by the US Federal Trade Commission (FTC) in relation to the deal between Teva and Allergan.

Completion of the Allergan deal, which Teva had predicted would occur in June, continues to be delayed pending approval from the FTC, while EU regulators cleared the transaction in March. However, Credit Suisse analysts expect it will be finalised soon, which they say will create more certainty "so that [Teva's] focus will shift to integration of the acquisition and other possible upside factors for [the company's] share."  

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