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Teva’s $40bn generic-drug buy sees Latham & Watkins and Sullivan & Cromwell lead

Cross-border teams from Sullivan & Cromwell and Latham & Watkins have landed the lead roles on the $40bn takeover of Allergan’s generic-making business by Teva that has seen the Israeli pharmaceutical powerhouse also abandon its bid for Mylan.

Dublin-headquartered biologic-drug business Allergan is selling its generic business for $40.5bn, including its legacy Actavis generic business, which Latham advised on the acquisition of in March this year; Medis, a third-party supplier; the company’s global generic R&D unit and its generic manufacturing operations. The Irish drug maker is keeping its biosimilars development program, its Anda distribution business, and its medical aesthetic business which includes brands such as Botox.

Latham used a large cross-border team representing Allergan with advice on corporate/M&A matters fielded by New York/Orange County partner Charles Ruck and Orange County partner Scott Shean. Finance advice was provided by New York-based partner Wesley Holmes, with London-based Sean Finn and US partners Laurence Stein and Nicholas DeNovio providing counsel on tax matters.

The rest of the team included partners Jim Barrall and Catherine Drinnan in London working on benefits and compensation; and US partners Kenneth Schuler on IP; Stuart Kurlander and Carolyne Hathaway on regulatory; and Christopher Norton on environmental matters. 

Weil, Gotshal & Manges’s Washington DC office advised Allergan on antitrust matters in the US with a team led by partners Steven Newborn, Ann Malester and Jeff White. Competition outside of the States was handled by Cleary Gottlieb Steen & Hamilton with a team led by Romano Subiotto QC, based in Brussels and the City, while New York finance partners Meme Peponis and Jeff Karpf handled parts of the deal’s finance.

Sullivan & Cromwell advised Teva on the purchase with corporate partners Joseph Frumkin and Krishna Veeraraghavan in New York, Eric Krautheimer in Los Angeles and Palo Alto-based Sarah Payne. In London tax partner Michael McGowan and antitrust specialist Juan Rodriguez provided support with the rest of the US firm’s team including IP partner Nader Mousavi in Palo Alto and New York partners David Wang, Steven Holley and Matthew Friestedt, covering tax, antitrust, and executive compensation and benefits respectively.

In June, the firm stepped in to represent the company on its $40bn unsolicited bid for Mylan, following a judge’s ruling that Kirkland & Ellis could not move forward in representing Teva because of a conflict. That deal, which has now been abandoned due to the Allergan purchase, also saw Benelux firm De Brauw Blackstone Westbroek and Israeli outfit Tulchinsky Stern Marciano Cohen Levitski & Co advising Teva.

The deal is on a cash free and debt free basis and, on closing, will see Allergan receive $33.75bn in cash, which will be financed through a combination of new equity, debt financing and cash on hand. Allergan will also receive Teva shares valued at $6.75bn, representing under 10% ownership stake in Teva and retain 50% of Teva’s future economics from generic drug lenalidomide (Revlimid).

Approved by both the Teva and Allergan boards, the transaction is expected to close in the first quarter of 2016. Following completion, Teva is expected to have sales of around $26bn with an EBITDA of $9.5bn in 2016, including an estimated $11bn in sales outside of the US.