18 September 2017

Teva to offload assets

Teva Pharmaceutical Industries is selling its intrauterine device manufacturing business ParaGard to Cooper Companies for USD 1.10 billion as it seeks to raise money to reduce debt. The deal is expected to close by the end of this year, subject to closing conditions and regulatory approvals.

Listed on Nasdaq and the Tel Aviv Stock Exchange, Teva manufactures generic medicines such as sterile products, hormones, narcotics, and high-potency drugs. It also produces women’s health products and speciality pharmaceuticals designed to treat central nervous system and respiratory disorders, among other illnesses.

Teva’s ParaGard is a non-hormonal copper-releasing device that is implanted in the uterus to prevent pregnancy for up to a decade. The US Food and Drug Administration-approved product works by triggering a sterile inflammatory reaction harmful to sperm to prevent fertilisation. ParaGard devices are exclusively produced in a Buffalo, New York-based manufacturing plant, which will be transferred to Cooper Companies as part of the deal. Overall, the ParaGard business segment yielded about USD 168 million in the 12 months ended 30th June 2017.

According Teva’s interim chief executive Yitzhak Peterburg, the proceeds from the sale will be used for term loan repayment under its senior credit facility. He added: “Today’s announcement emphasises our commitment to divest non-core businesses to ensure that Teva is even more focused and efficient in this rapidly changing and highly-competitive environment.”

As of 30th June 2017, the seller had total debt of USD 35,100 million, which exceeded shareholders’ equity worth USD 29,600 million. The group posted revenue of USD 11,316 million in H1 2017, up 14.9 per cent on the USD 9,848 million recorded during the same timeframe in the previous year. Net loss for the period, however, totalled USD 5,329 million, compared to net income of USD 875 million in the corresponding interval of 2016.

The announcement comes barely a year after Teva successfully raised GBP 603 million by selling its generic medicine businesses Actavis UK and Actavis Ireland to Intas Pharmaceuticals’ unit Accord Health. The seller is also looking at other asset sales and has earmarked its women’s health, oncology and pain pharmaceutical businesses in Europe for further fundraising. In all, Teva expects to yield at least USD 2,000 million in proceeds from its divestment.  

Despite the disposals, Teva has not shied away from making big bets on other pharmaceutical businesses, as shown by Zephyr, the M&A database published by Bureau van Dijk. The group spent a whopping USD 40,500 million to acquire the global generic drugs manufacturing business of Allergan just over a year ago. Teva also purchased Mexican pharmaceutical developer Representaciones e Investigaciones Medicas for USD 2,300 million and took over New Jersey, US-based pharmaceutical distributor Anda for USD 500 million in 2016.

© Zephyr