Teva to buy Barr for $7.46 billion, boost generic lead

By Lewis Krauskopf

NEW YORK (Reuters) - Teva Pharmaceutical Industries (TEVA.O: Quote, Profile, Research, Stock Buzz) (TEVA.TA: Quote, Profile, Research, Stock Buzz), the world's largest generic drug company, said on Friday it would buy rival Barr Pharmaceuticals Inc (BRL.N: Quote, Profile, Research, Stock Buzz) for $7.46 billion to expand its leadership in the U.S. market and fortify its presence in Europe.

The deal, which began taking shape in talks outside a Florida hamburger restaurant, is the latest in a wave of consolidation in the generic-drug sector that some analysts suspect will result in a handful of major global players.

Teva would gain a prominent women's health franchise, including Barr's major portfolio in generic oral contraceptives. Barr also sells the brand-name contraceptive Seasonique, and the Plan B emergency contraceptive.

"Businesswise, the acquisition makes tons of sense for Teva," said Yoav Burgan, pharmaceuticals analyst at Leader Capital Markets in Tel Aviv, adding that cost savings should be "very substantial."

Israel-based Teva, the world's largest generic drug company, plans to buy New Jersey-based Barr for $66.50 per share in cash and stock, making it the largest deal ever by an Israeli company.

The price represents a 42 percent premium to Barr's closing price on Wednesday. Barr shares rose 22 percent on Thursday on reports of a Teva acquisition, and an additional 11 percent to $63.43 on Friday.

Morningstar analyst Brian Laegeler said Barr was trading below the offer price since the deal may take some time to close and there was a small antitrust risk. Teva shares rose 4.4 percent to $42.87.

UBS analyst Ricky Goldwasser said the deal value looked in line with other acquisitions in the area.