UPDATE 4-Teva in talks for Barr deal; few hurdles seen

(Recasts first paragraph with new sourcing, adds closing stock prices)

By Lewis Krauskopf and Tova Cohen

NEW YORK/TEL AVIV, July 17 (Reuters) - Teva Pharmaceutical Industries Ltd is in talks to acquire rival generic drug maker Barr Pharmaceuticals Inc BRL.N, sources familiar with the situation said on Thursday.

Few hurdles would impede a potential purchase of Barr, which saw its stock surge 22 percent as news emerged of the potential deal worth up to $7.5 billion.

Although the deal would increase Teva's leadership in the U.S. generics market, antitrust experts said such a deal would still likely win clearance after minor divestitures.

And although another suitor -- such as Novartis AG's (NOVN.VX) Sandoz unit or a large brand drug maker -- could emerge, analysts pegged the ever-acquisitive Teva (TEVA.O) (TEVA.TA) as the most logical buyer.

"Acquisitions are part of the way Teva operates and it also has done a very good job integrating them, so it would make sense," said Mike Krensavage, principal of Krensavage Asset Management LLC.

TheMarker and Globes financial newspapers reported that Israel-based Teva, the world's biggest maker of generic drugs, was in talks to buy New Jersey-based Barr in what would be a further consolidation of the generic drugs industry. Teva shares fell more than 3 percent in Nasdaq trading, closing at $41.05, down $1.36.

Spokespeople for both Teva and Barr said the companies do not comment on rumors. Teva also issued a brief statement to the Tel Aviv Stock Exchange in the wake of the reports saying "The company has no intention of reacting to rumors."

TheMarker put the price tag at $7.5 billion, citing capital market sources. That would make it Teva's biggest acquisition, surpassing the $7.4 billion purchase of U.S.-based Ivax two years ago. Globes cited a price of $7 billion to $7.5 billion.

Barr had a market value of $5.1 billion before Thursday's trading.

Valuations of recent large acquisitions of generic companies would imply a Teva-Barr deal worth roughly $8 billion, including about $1.5 billion in assumed net debt, according to analysts at Goldman Sachs.

However, if the $7.5 billion price tag cited in the Israeli reports excluded debt, it would put the price for Barr at about $69 per share.

Barr shares hit a high of $58.51 and closed at $57.17, up $10.35, or 22.1 percent, on the New York Stock Exchange.

A deal in the high $60-per-share range "would be more than fair to the Barr shareholders," Morningstar analyst Brian Laegeler said.

Recent events may be propelling this deal. Teva recently released study results showing a new dosage of its big-selling multiple sclerosis drug Copaxone was not more effective than the current version, endangering Teva's ability to extend the key franchise.