Teva to use cash, lines of credit to fund Ratiopharm acquisition

By Jennifer Lanning Drey

Portland, Ore., March 18 - Teva Pharmaceutical Industries Ltd. plans to finance its acquisition of Ratiopharm GmbH using about $3 billion of cash on hand and $2 billion in lines of credit, Eyal Desheh, chief financial officer of Teva, said during a company conference call held Thursday.

Teva has entered into a definitive agreement to acquire Ratiopharm for just over €3.6 billion, or about $5 billion, the company announced Thursday.

Most of the lines of credit planned to be used by Teva are already committed and available to be drawn upon closing of the transaction, Desheh said.

At Dec. 31, Teva had cash and marketable securities of $2.5 billion, according to its fourth-quarter earnings release.

The company expects to generate nearly $3 billion of free cash flow after dividends and capital expenditures in 2010, Desheh said.

"Teva has a very strong cash flow and generates a very strong cash flow on an ongoing basis," he said.

Teva expects to complete the transaction by year-end 2010.

Upon completion, the company expects to realize synergies of at least $400 million within three years.

On a pro forma basis, the combined company would have had 2009 revenues of $16.2 billion.

Teva makes generic and human pharmaceuticals as well as active pharmaceutical ingredients. The company is based in Petach Tikva, Israel.

Ratiopharm is a generics producer based in Ulm, Germany.

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