March 19, 2010, Teva to Obtain Ratiopharm for $4.9 Billion
Generic pharmaceuticals giant Teva Drug Industries Ltd. (Nasdaq: TEVA; TASE: TEVA) will purchase German generic drugs business Ratiopharm.
Teva's winning deal was about?.625 billion, or $4.9 billion. The bidding process for Ratiopharm ended today.
Ratiopharm has yearly sales of around $8.6 billion. US drugs large Pfizer and also Iceland-based Actavis were among the bidders in the final round, but Teva beat their deals.
Teva CEO Shlomo Yanai stated, "This is a vital purchase for Teva. This transaction is flawlessly aligned with our long-lasting strategy in which Europe is an important pillar and also development vehicle driver. Ratiopharm will provide us with the ideal platform to strengthen our management placement in vital European markets, most especially in Germany, as well as rapidly growing generic markets such as Spain, Italy as well as France."
The price for Ratiopharm mirrors a profits prior to interest, tax obligations, devaluation and amortization (EBITDA) multiple of 11.4 and also a sales multiple of 2.2, based on Ratiopharm's figures for 2009. For specialty chemicals of comparison, Teva acquired Barr Pharmaceuticals in 2008 at an EBITDA multiple of 13.2 and a sales multiple of 3.4, and also it acquired Ivax Company in 2006 at EBITDA multiple of 26 and a sales multiple of 4.1. Basically, Teva did not pay a high cost for Ratiopharm in comparison with previous acquisitions, evidently because of Ratiopharm's reduced EBITDA margin.
The purchase will certainly strengthen Teva's setting in the German market, Europe's largest. This was an objective continuously proclaimed by Teva's executives in the past. European sales currently account for much less than 25% of its complete sales.
Leader Resources Markets analyst Yoav Burgan states, "It must be confessed that the cost is not very low, but there have been far more costly M&A deals in the common medicine industry in the last few years. Interest will certainly currently resort to streamlining Ratiopharm. This is a business with significant potential, but in my point of view, a lot of job is needed on Teva's part due to the fact that Ratiopharm needs enormous streamlining."
Burgan gives Teva a "Buy" suggestion with a target price of $65.
Teva's winning deal was about?.625 billion, or $4.9 billion. The bidding process for Ratiopharm ended today.
Ratiopharm has yearly sales of around $8.6 billion. US drugs large Pfizer and also Iceland-based Actavis were among the bidders in the final round, but Teva beat their deals.
Teva CEO Shlomo Yanai stated, "This is a vital purchase for Teva. This transaction is flawlessly aligned with our long-lasting strategy in which Europe is an important pillar and also development vehicle driver. Ratiopharm will provide us with the ideal platform to strengthen our management placement in vital European markets, most especially in Germany, as well as rapidly growing generic markets such as Spain, Italy as well as France."
The price for Ratiopharm mirrors a profits prior to interest, tax obligations, devaluation and amortization (EBITDA) multiple of 11.4 and also a sales multiple of 2.2, based on Ratiopharm's figures for 2009. For specialty chemicals of comparison, Teva acquired Barr Pharmaceuticals in 2008 at an EBITDA multiple of 13.2 and a sales multiple of 3.4, and also it acquired Ivax Company in 2006 at EBITDA multiple of 26 and a sales multiple of 4.1. Basically, Teva did not pay a high cost for Ratiopharm in comparison with previous acquisitions, evidently because of Ratiopharm's reduced EBITDA margin.
The purchase will certainly strengthen Teva's setting in the German market, Europe's largest. This was an objective continuously proclaimed by Teva's executives in the past. European sales currently account for much less than 25% of its complete sales.
Leader Resources Markets analyst Yoav Burgan states, "It must be confessed that the cost is not very low, but there have been far more costly M&A deals in the common medicine industry in the last few years. Interest will certainly currently resort to streamlining Ratiopharm. This is a business with significant potential, but in my point of view, a lot of job is needed on Teva's part due to the fact that Ratiopharm needs enormous streamlining."
Burgan gives Teva a "Buy" suggestion with a target price of $65.
