Teva announced its acquisition of Cephalon a month ago for $6.8 billion, rescuing the company from a hostile takeover attempt by Canada's Valeant Pharmaceuticals International Inc. (NYSE; TSX: VRX).
Cephalon also disclosed its expected results for 2011-23, which it provided Teva during the acquisition negotiations. Cephalon expect a net profit of $668 million on $3.1 billion revenue in 2011, but it expects tougher times in 2012, when patents expire: a 19.4% drop in revenue to $2.5 billion and a 41% drop in net profit to $384 million.
Cephalon expects an adjusted net profit of $768 million on $3.4 billion in 2015. Teva's strategic plan states that $5-6 billion of the $31 billion revenue target for 2015 would come from acquisitions. The acquisitions of Germany's Ratiopharm, Cephalon of the US, and other companies will likely result in higher numbers.
Cephalon stated in its filing that it had been in talks with five parties about an acquisition, which it listed as Party A through Party E - three pharmaceutical companies and two financial institutions.
The talks with Teva were initiated in March, when Buchi had dinner with Teva Americas president and CEO William Marth "to discuss industry developments". They did not talk about a deal. A few days later, they held another meeting, which Teva president and CEO Shlomo Yanai attended. At the same time, Cephalon's financial advisors contacted 26 strategic parties and five financial institutions, all of which were interested in acquiring the company.
After the meeting with Yanai on April 7, Teva and Cephalon began talks, and in late April Marth called Buchi with a figure: $80 per share, $7 per more than Valeant was offering. Cephalon's directors asked for more if Teva wanted exclusive negotiations. Marth then said that Teva would offer up to $81.50 per share and no more.
$81.50 was the price set in the deal.
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