Faulding injectable generic drug sales – $160 mln in past 12 months
Avishai Ovadya
15.07.2001 17:37
All of the previous acquisitions by Teva (Nasdaq: TEVA) were successfully merged into the generic drug giant. Analysts say that the acquisition of the injectable generic drug business of FH Faulding & Co. (ASX: FHF) of Australia should be no exception.
Last week, Teva received the exclusive right to acquire Faulding's injectable generic drug business for $365 million in cash, as part of Mayne Nickless's offer to acquire Faulding.
"According to Teva's best estimates", state Banc of America Securities' analysts, "the business generated $160 million in revenues over the past 12 months" This is all very nice, but why didn’t Teva bother to notify the public of this fact? Why must the public learn about these numbers from analysts' reports? True, this is not a major detail, but the principle that ought to drive Teva is that there are no lesser among equals.
Teva said in response today, "Teva added its estimates in a conference call." This response did not convince us, because Teva should not have had to "hide" them to the multitudes, while revealing them only to its secret partners, the analysts.
Banc of America Securities' analysts emphasize that the $365 million purchase price reflects a sales multiple of 2.3. They write, "Currently, Teva has a generic injectables business in Europe through the acquisition of the Dutch firm Pharmachemie in 1998, but has no presence in the US...”
There is an apparent overlap in the activities of the two companies, but Teva COO Israel Makov said at the end of last week, "There is more supplement than overlap." The analysts concur, writing, "This combination would also position Teva as the worldwide leader in generic oncology products."
Nevertheless, Teva will not immediate profit from the transaction. "When we buy a company," said Makov, "the acquisition usually hurts the short-term profit per share, adding profits later. We estimate there may be a slight dilution in the period immediately following the acquisition, and contribute to profits later."
The analysts write, "The acquisition is likely to be accretive by 2003," as they retain their "Strong Buy" recommendation for the share. They add, "The company also indicated that dilution in the first year should be minimal." The analysts estimate that Teva will earn a profit per share of $2.19 in 2002, compared with $1.77, and give a target price of $77 in the next 12 months.
Published by Israel's Business Arena on ý15ý April 2001 |
