Teva Pharmaceutical Industries, the troubled Israeli drug maker that’s slashed its dividend and earnings goals, has attracted interest from pharmaceutical and buyout firms for the assets it’s selling to reduce debt, according to people familiar with the matter.
Drug makers including Fresenius, Mylan and Novartis are considering bids for Teva’s European oncology and pain treatments, the people said, asking not to be identified because the deliberations are private. Buyout firms Cinven and Bain Capital may also be interested if their bid for German generic drugs maker Stada Arzneimittel is successful, the people said.
Separately, Teva’s women’s health portfolio has attracted buyout firms such as CVC Capital Partners, Avista Capital Partners, Thomas H Lee Partners, Apax Partners, TPG Capital and Apollo Global Management, as well as France’s Pierre Fabre and Spain’s Chemo Group, the people said. Teva may sell the unit’s US and European assets to different buyers, they said.
Final offers for both units are expected at the end of August, and Teva, the world’s biggest maker of generic medicine, may decide against a sale if bids don’t meet valuation expectations, the people said.
Teva’s shares have dropped 40% this year.
Representatives for Teva, Fresenius, Mylan, Novartis, CVC, Apax, Cinven, Avista, Thomas H Lee, TPG and Pierre Fabre declined to comment. Chemo Group, Bain and Apollo had no immediate comment.
Divestments will help generate at least $2bn, exceeding Teva’s initial target of $1bn, interim chief executive officer Yitzhak Peterburg said on August 3. The sales are likely to be completed by the end of the year, and the company is also looking at other “non-core” operations, he said. The company is selling assets to reduce its approximately $35bn debt load.
Teva may have to renegotiate and amend some debt covenants if cash flow worsens or proceeds from asset sales are lower than expected, interim chief financial officer Michael McClellan said on a conference call with analysts. The warning came as the company pared its profit forecast for the year and slashed its dividend by 75%.
Moody’s Investors Service said the company’s debt reduction is slower than it expected, and cut Teva’s credit grade to one level above junk this week. The company’s ratings will remain under pressure in the next 12 to 18 months, Moody’s said.
A signage is seen at Teva Pharmaceutical Industries headquarters in Petach Tikva, Israel. Teva’s women’s health portfolio has attracted buyout firms such as CVC Capital Partners, Avista Capital Partners, Thomas H Lee Partners, Apax Partners, TPG Capital and Apollo Global Management, as well as France’s Pierre Fabre and Spain’s Chemo Group, sources said.
