LONDON — Israeli drugmaker Teva Pharmaceuticals said Monday that it had agreed to acquire the generic drug division of Allergan for $40.5 billion in cash and stock.
The transaction, if completed, would be the latest in what has been a frenzied period of deal-making in the pharmaceutical sector as drugmakers look to strengthen their mix of products through acquisitions.
Allergan, based in Dublin, has been a frequent buyer in recent years. On Sunday, it announced a separate deal to buy Naurex, a developer of drugs for depression and other central nervous system disorders, for $560 million.
The Allergan generics transaction would create a company with estimated, pro forma revenue of $26 billion in 2016, including about $11 billion in sales outside the United States, Teva said.
"Our respective portfolios of generic medicines and applications are highly complementary, providing Teva with high-quality growth and earnings visibility, and the scale and resources to expand upon our specialty capabilities," Erez Vigodman, the Teva president and chief executive, said in a news release.
The deal signals the end of Teva's pursuit of Mylan, a rival based in the Netherlands. Mylan had repeatedly rebuffed takeover offers from Teva and is pursuing another drugmaker, Perrigo, which has resisted several offers.
The Allergan deal cements Teva's position as the world's biggest seller of off-brand medicines. Last year, it recorded revenue of $20.3 billion.
Allergan, which has its U.S. headquarters in Parsippany, N.J., provides treatments in dermatology, aesthetics, women's health, eye care and cardiovascular disease. The company reported revenue of $13.1 billion in 2014. In November, Allergan, which makes Botox, agreed to be acquired for $66 billion by Actavis, a maker of generic drugs. The deal was completed in March.
Large pharmaceutical makers have engaged in a wide variety of deals in recent years to increase their scale, giving them greater negotiating power with health insurers and medical providers. Pharmaceutical companies have also pursued acquisitions in order to gain access to new drugs in late-stage development, providing new treatments without having to engage in the lengthy and often expensive research and development process.
As part of the agreement with Teva, Allergan said the Israeli drugmaker would acquire the Actavis global generics business, including United States and international generics commercial businesses.
News of a potential deal between Allergan and Teva emerged this weekend. The transaction has been unanimously approved by the boards of both companies and is expected to close in the first quarter. It is subject to regulatory approval.
Allergan would receive $33.75 billion in cash and shares worth about $6.75 billion, representing an ownership stake of under 10 percent in Teva.