Germany's Bayer has agreed to buy Teva Pharmaceutical Industries' U.S. animal health operations for up to $145 million to bolster its veterinary drug business.
The price includes a $60 million upfront payment and $85 million in payments linked to manufacturing and sales targets, the German drugmaker said. Bayer expects to close the deal in 2013 after it gains antitrust and regulatory clearance.
This is Teva's first significant asset sale since Jeremy Levin took over as president and CEO in May.
The Bayer deal includes the sale of Teva Animal Health's production facility in St. Joseph, Missouri, which employs 300.
Yitzhak Krinsky, Teva's vice president for corporate business development, said the transaction is part of Teva's plan to concentrate on generic and original drugs. The Israeli firm is the world's largest generic drug manufacturer.
In 2008, Teva sold Israeli veterinary drugmaker Abic for $47 million. Teva's veterinary drug business has become a minor segment of its overall sales, though the decision to sell the U.S. operations may also stem from the unit's quality control problems between 2009 and 2011. In 2009, Teva Animal Health had to pull its veterinary products from the shelves after the U.S. Food and Drug Administration found problems with products from the Missouri plant.
Other pharmaceutical companies are trying to get into the veterinary drug business. The Bayer deal was announced within 24 hours of an announcement by American-Israeli drugmaker Perrigo that it was buying Sergeant's Pet Care Products for $285 million in cash. Sergeant's is based in Omaha, Nebraska.