The HealthCare unit of
) recently received the necessary regulatory approval from the
Federal Trade Commission to complete its acquisition of
Teva Pharmaceutical Industries Limited
) animal health unit in the US.
In September 2012, Bayer announced that in a bid to diversify
its business and expand its animal health business, it inked a
deal with Teva to buy its animal health unit.
As per the deal, Bayer will be paying $145 million including
an upfront payment of $60 million along with a total of $85
million in milestone payments on the successful and timely
achievement of manufacturing and sales targets. The deal will
also give Bayer access to Teva's 300-employee manufacturing site
at St. Joseph.
The transaction makes sense for both companies. While the move
will enable Bayer to boost its companion animal and food animal
product portfolios in the US, it will enable Teva to focus on
developing, manufacturing and marketing branded and generic drugs
globally -- Teva's primary areas of strength.
The inclusion of Teva's US animal health unit will not only
add reproductive hormones to Bayer's product portfolio but also
provide multiple anti-infective solutions for treating infections
in livestock to Bayer's food animal unit. Following the
completion of the deal, Bayer's companion animal unit will boast
of dermatological, pet wellness and nutraceutical offerings.
We note that Bayer has been quite active on the acquisition
front lately. In August, the CropScience unit of the company
acquired AgraQuest, Inc., formerly a global supplier of
innovative biological pest management solutions, for $425 million
(approximately €340 million) in addition to milestone payments.
The acquisition has boosted Bayer's fruits and vegetables
business while building a strong technology platform based on
However, in November 2012, the company announced that it will
not go ahead with its proposed acquisition of nutritional
supplement company Schiff Nutrition International. Bayer had
announced its intention to buy Schiff Nutrition for $1.2 billion
in October 2012.
We currently have a Neutral recommendation on both Bayer and
Teva. Both stocks carry a Zacks #3 Rank (Hold). However, other
pharma stocks such as
Novo Nordisk A/S
) carry a Zacks #2 Rank (Buy).
BAYER A G -ADR (BAYRY): Free Stock Analysis
NOVO-NORDISK AS (NVO): Free Stock Analysis
NOVARTIS AG-ADR (NVS): Free Stock Analysis
TEVA PHARM ADR (TEVA): Free Stock Analysis
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