Teva elbows aside Valeant with $6.8B buyout deal for Cephalon

Teva has swooped in and sealed a deal to snatch up the embattled Cephalon for $6.8 billion in cash, a hefty $1.1 billion more than Valeant had offered to pay for the drug developer in a hostile takeover bid. The merger, if it goes through, will leave Teva with a much broader pipeline of specialty therapeutics, with more than 30 compounds in late-stage development and a combined $7 billion in annual branded drug sales. And while Cephalon CEO Kevin Buchi didn't come out and taunt Valeant directly after sparring with the Canadian biotech over Cephalon's heavy commitment to R&D, he zeroed in on Teva's avid interest in its pipeline as a key motivator.

"Teva shares our strong commitment to R&D, and we believe our pipeline will thrive under their leadership," said Buchi. "We look forward to working with the Teva team to ensure a smooth transition and complete the transaction as expeditiously as possible."  

Cephalon has been growing its business with a string of buyouts of its own. Just in the past few weeks the biotech has struck deals to buy Gemin X for $525 million and ChemGenex for $163 million. A spokesperson for Cephalon tells FierceBiotech that the Teva deal shouldn't affect those acquisitions, both of which deliver late-stage cancer drugs.

For Teva, a company best known for its generics business, the deal marks a further expansion of its specialty drug portfolio. And Teva CEO Shlomo Yanai zeroed in on the deal's impact on sales and marketing. "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."

Teva is paying $81.50 a share, gaining a pipeline with new drugs for CNS, oncology, pain and respiratory ailments. And a number of analysts surveyed by Reuters said they felt the deal was fair, and unlikely to be challenged by Valeant.

"There's always the possibility someone else could come in, but I think the likelihood of Valeant offering a higher bid is low, judging from the language they've used in the past," analyst Jon LeCroy told Reuters. "I don't see them coming back. Right now it looks like the Teva bid will stick."

- here's the Teva release
- here's the Reuters report