Allergan CEO: Teva Made A 'Compelling Offer', We couldn't Refuse

Teva Pharmaceutical Industries Ltd (ADR)TEVA announced on Monday that it would be acquiring Allergan PLC AGN's generics unit in a $40.5 billion cash and stock deal.

Brent Saunders, Allergan president & CEO, was on CNBC recently to discuss the deal.

No Debt On Balance Sheet Soon

"We have roughly $42 billion in debt, mostly from doing the Allergan deal," Saunders began. "The proceeds here should net out to be about $36 billion or so after tax. And so when you look at where we stand [this deal] close let's say in the first-quarter, we continue to generate a lot of free cash flow, we should be at essentially no net debt by the time this closes."

Right Deal At Right Time

Saunders explained how much generics business contribute to Allergan's overall revenue and highlighted how the timing of the deal is important saying, "It was about a little less than a third of our revenue, about $2.4 billion of our EBITDA. So, you could do the multiple math, it's almost 17 times is what Teva is paying. And if you had asked me 3 weeks ago if this business was for sale, I would have said, 'absolutely not'."

"But they came to us with a compelling offer. When you really look at the landscape, if you look at the consolidation of the buying groups. So, the payers...we are down to essentially 3 retailers at the pharmacy level in the United States, this is the right deal for us at the right time," Saunders said.