Teva acquires Cephalon for $6.8 billion

Two pharmaceutical companies with big footprints in the Philadelphia area joined forces Monday morning to ward off an unwanted out-of-towner.

Teva Pharmaceuticals Industries, Ltd., is headquartered in Israel, but has long operated prominently in this area and on Monday it acquired Cephalon, Inc., of Frazer, in a $6.8 billion deal, both companies announced.

Cephalon was trying to ward off a hostile takeover attempt by Valeant Pharmaceuticals International, which is headquartered in the Toronto suburb of Missasauga, Ont.

Valeant's offer of $73 per share was trumped by Teva's offer of $81.50 per share for all outstanding shares.

Teva said the combined companies would have about $7 billion in sales.

"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," Shlomo Yanai, president and chief executive officer of Teva said in a statement. "This is transforming for Teva's branded business, as it will help us to deliver on our strategic goal of creating a diversified, multifaceted 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 CEO Kevin Buchi said in a statement: "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. 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."

The statement suggested there would be $500 million in cost synergies, which can sometimes translate into job cuts, but none were specified.