Teva, Allergan Get FTC Approval for Generics Purchase

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A Teva Pharmaceutical plant outside Tel Aviv in 2013. ENLARGE
A Teva Pharmaceutical plant outside Tel Aviv in 2013. Photo: European Pressphoto Agency

Teva Pharmaceutical Industries Ltd. TEVA 1.57 % on Wednesday won regulatory approval from the Federal Trade Commission for its acquisition of Allergan PLC’s generics business, conditioned upon Teva’s divestiture of 75 drugs to rivals.

The FTC said the order will preserve competition in markets where Teva and Allergan currently compete or would have likely competed if not for the merger. The companies said the cash-and-stock acquisition—which was valued at $40.5 billion when it was announced—is expected to close next week now that regulatory hurdles have been cleared.

The drugs to be shed span Teva’s business, ranging from treatments for cancer and Parkinson’s disease to antibiotics and anesthetics. Acquirers include India’s Dr. Reddy’s Laboratories Ltd. RDY -0.66 % , Impax Laboratories Inc. IPXL 2.11 % and Perrigo Pharma International.

Some of the divesting is already under way. In its yearlong bid to win regulators’ blessing, Teva las month said it would sell 15 drugs to Impax for $586 million and eight drugs to Dr. Reddy’s for $350 million.

Teva and Allergan struck the merger deal last July, a pact that pushes Israel-based Teva into the top ranks of global drug companies, giving it bigger scale in the hotly competitive generic-drug market. Before the deal, Teva had been pursuing a tie-up with rival Mylan NV, which itself unsuccessfully chased generics maker Perrigo Co. PRGO 0.62 %

Allergan, for its part, had agreed to a separate deal by which Pfizer PFE 0.05 % would buy the rest of the company for $150 billion, but that deal fell apart after the U.S. imposed tough new curbs on corporate deals that would move headquarters overseas for tax purposes.

The generics deal will give Allergan cash to pay down its debt and the ability to focus on the more profitable name-brand drugs. Actavis was renamed Allergan last year, after striking deals that gave it drugs such as the wrinkle fighter Botox.

Teva said in March that sealing the deal was taking longer than it anticipated because of regulatory hurdles. The company had earlier said it expected to close the transaction as early as the end of the first quarter.

Analysts had said the FTC was the bottleneck, with that regulator waiting for input from the U.S. Food and Drug Administration on pipeline divestitures.

In a statement Wednesday, Teva Chief Executive Erez Vigodman said Teva is “pleased to have received all of the requisite regulatory approvals” for the tie up and called the acquisition “a transformative step” for the company. The company has said the deal would result in $1.4 billion in savings, partly because of lower taxes, by the end of 2019 and push adjusted earnings up 14% next year.

Shares of Teva rose 1.5% in afternoon trading Wednesday. Allergan shares, meanwhile, gained 4%.

Lisa Beilfuss at lisa.beilfuss@wsj.com



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