Al­ler­gan to sell a quar­ter of its Teva stake in Q1 2018

The Jerusalem Post - - BUSINESS & FINANCE -

NEW YORK (Reuters) – Al­ler­gan Plc said on Mon­day it will sell just un­der a quar­ter of its roughly 10 per­cent stake in Is­rael’s Teva Phar­ma­ceu­ti­cal In­dus­tries dur­ing the first quar­ter of 2018, as it starts to un­wind its po­si­tion in the strug­gling generic drug­maker.

Bo­tox maker Al­ler­gan said in a fil­ing with the Se­cu­ri­ties and Ex­change Com­mis­sion that it will sell 25 mil­lion shares to a JP Mor­gan Chase and Co unit – act­ing as a dealer for the shares – some­time next quar­ter. The JP Mor­gan unit will pay a price based on the av­er­age trad­ing price over a yet-to-be de­ter­mined pe­riod be­fore the sale.

Al­ler­gan sold its gener­ics busi­ness to Teva in Au­gust 2016 for $33 bil­lion in cash and 100 mil­lion shares of the Is­raeli generic drug­maker, worth around $5.3 bil­lion at the time.

Un­der the terms of the deal, Al­ler­gan had to hold the shares for at least one year. That has turned out to be a costly agree­ment for the drug­maker, as Teva’s shares have lost more than three-fourths of their value since the deal.

Al­ler­gan’s shares have lost around a third of their value over that pe­riod.

Al­ler­gan said on Nov. 1 that it planned to be­gin sell­ing its Teva stake, and this was the first an­nounced sale of the stock.

Two of Is­rael’s fi­nan­cial news out­lets re­ported later that week that bil­lion­aire busi­ness­man Len Blavat­nik was look­ing to buy a sig­nif­i­cant stake in debt-rid­den Teva, pos­si­bly through a deal with Al­ler­gan.

It was not clear who the ul­ti­mate buyer of Al­ler­gan’s shares will be in the JP Mor­gan trans­ac­tion.

In the same fil­ing, Al­ler­gan said it had taken a mar­gin loan from JP Mor­gan on its whole 100 mil­lion-share stake in Teva.

It did not say how much it was bor­row­ing against the shares, but said it planned to use pro­ceeds from the loan to fi­nance the buy­back of 2019 bonds.

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