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 (JPM.N) 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 leading 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.
By Michael Erman
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