Teva Pharmaceutical Industries Ltd. announced today that it sold $15 billion bond offering, Monday to help fund its acquisition of Allergan PLC’s generics division. This makes Teva the latest company to take advantage of attractive financing conditions with a massive debt offering. Reuters reported that the offering had attracted demand of $70 billion.
Teva’s debt offering, via by its special purpose finance subsidiary Teva Pharmaceutical Finance Netherlands III B.V., consists of the following tranches:
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$1.5 billion of 1.400% fixed rate senior notes maturing in 2018;
$2.0 billion of 1.700% fixed rate senior notes maturing in 2019;
$3.0 billion of 2.200% fixed rate senior notes maturing in 2021;
$3.0 billion of 2.800% fixed rate senior notes maturing in 2023;
$3.5 billion of 3.150% fixed rate senior notes maturing in 2026; and
$2.0 billion of 4.100% fixed rate senior notes maturing in 2046.
The notes will be sold at a price of 99.914%, 99.991%, 99.835%, 99.666%, 99.734% and 99.167% of the principal amount thereof, respectively, and will be guaranteed by Teva Pharmaceutical Industries Limited.
Moody’s Investors Service assigned a Baa2 rating to the notes.
The company says that additional senior, unsecured benchmark-sized offerings of euro and/or Swiss francCHF-denominated multi-tranche debt securities are contemplated, subject to market conditions.
Teva originally planned the offering for the fourth quarter – it has a bridging bank loan that gives it flexibility over the timing – but brought the timetable forward because of the low interest rate environment. Teva also published its multi-year guidance last week, earlier than expected, even though it had not yet completed the Allergan deal.
Teva is paying $35.1 billion net and nearly $40 billion gross for Allergan generics division Actavis. The companies are still waiting for approval from the US Federal Trade Commission in order to complete the deal signed a year ago.
Teva CFO Eyal Desheh said, “The strength of the demand, which was multiple times the size of the offering, and the attractive prices, are a testament to Teva’s financial strength and strong reputation with investors.”
Teva says that the net proceeds from this offering will be approximately $14.9 billion, after the underwriting discounts and estimated offering expenses. As mentioned Teva intends to use the net proceeds from this offering towards the cash portion of the purchase price for its previously announced acquisition of Allergan plc’s worldwide generic pharmaceuticals business (“Actavis Generics”), to pay related fees and expenses, and/or otherwise for general corporate purposes. Closing of the offering is expected on July 21, 2016.
Barclays, BofA Merrill Lynch, BNP PARIBAS, Credit Suisse, HSBC, Mizuho Securities, Citigroup, Morgan Stanley, RBC Capital Markets and SMBC Nikko are acting as the joint book-running managers for the offering. Rothschild & Co. acted as sole financial advisor to Teva in connection with the offering.
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