Teva, Barr Ink $7.5 Billion Merger Deal

Teva Pharmaceutical (TEVA Quote) confirmed Friday that it has indeed inked a deal to acquire fellow generic-drug maker Barr Pharnaceuticals (BRL Quote). The Israel-based company has agreed to pay $7.46 billion in a cash-and-stock deal for N.J.-based Barr, the world's fourth-largest generic-drug company.

Under the deal, each common share of Barr will be converted into $39.90 in cash and 0.6272 in Teva's American depositary receipts. Based on Teva's closing price Wednesday on the Nasdaq, the price for Barr works out to $66.50 a share.

Rumors of talks between the two companies, first reported in Israeli newspapers, propelled the stocks in opposite directions Thursday. Barr surged $10.35, or 22.1%, to close Thursday at $57.17, but Teva sank $1.36, or 3.2%, to $41.05. In recent trading Friday, however, both stocks were on the rise: Teva was climbing $3.41, or 8.3%, to $44.46, and Barr was up $6.58, or 11.5%, at $63.75.

Beyond the $7.46 billion price, Teva also will assume Barr's outstanding debt of roughly $1.5 billion.

The combined company will have more than over 500 products on the market, more than 200 abbreviated new-drug applications (ANDAs) pending with the Food and Drug Administration and roughly "3,700 product registrations pending with various regulatory authorities worldwide, primarily in Europe," according to the companies.

Teva expects the deal to close in late 2008 and to be accretive to GAAP earnings in the fourth quarter after closing. The agreement calls for Barr to pay Teva a termination fee of $200 million in the merger deal is terminated.