Cephalon to acquire Swiss-based pharmaceutical company

Feb 1 2010

Cephalon, Inc. (Nasdaq: CEPH) announced today that it has signed an agreement to acquire Mepha AG and its subsidiaries, a profitable, privately-held, Swiss-based pharmaceutical company.  Mepha has specific expertise in innovative dosage formulations and markets both generic and branded generic products.  The acquisition diversifies the company's business mix, doubles the size of its international business, and provides an attractive platform to launch current and future products in new, developed and emerging markets.

Mepha manufactures and markets over 120 products in 50 countries and recognized sales of approximately CHF 400 million in 2009.  With its exposure to high-growth international markets, and a track record of innovation, Mepha has achieved compound annual growth rates (CAGR) in sales of more than 13 percent over the last five years.  In addition to its existing products, Mepha has a broad pipeline of approximately 50 chemical entities planned for launch over the next five years.

Under the terms of the agreement, Cephalon will purchase Mepha AG for CHF 622.5 million, or an estimated $590 million USD, from the Merckle family-owned Mepha Holding AG, subject to adjustments upon closing.  The transaction is expected to close in the next 10-12 weeks upon completion of certain closing conditions, including receipt of applicable antitrust approvals.  Cephalon expects that the acquisition will be accretive to adjusted earnings per share in 2010 and will update its 2010 guidance when it reports full year 2009 financial results on February 11, 2010.  In the interim, the company withdraws its full year 2010 guidance issued on October 27, 2009.

"The addition of Mepha will transform our international business overnight, expanding our ability to serve global markets and reach patients in new territories for the first time," said Frank Baldino, Jr., Ph.D., Chairman and CEO of Cephalon.  "With this deal, we now serve all three types of pharmaceutical markets, proprietary branded, generic and branded generic.  We believe this balance will increase the growth and stability of our business," added Baldino.

Alain Aragues, Executive Vice President and President of Cephalon Europe, said, "The acquisition of Mepha will help us to significantly grow our current business and positions us as a more attractive partner for further business development opportunities in the European, Middle East and African regions."

Dr. Thomas Villiger, CEO of Mepha Group, added, "Mepha and Cephalon complement each other as far as markets and products are concerned.  Mepha's leading position on the Swiss market will be immediately enhanced by the addition of innovative therapies from Cephalon."

Deutsche Bank Securities Inc. served as exclusive financial advisor to Cephalon.

Cephalon will host a conference call for investors and analysts on February 1, 2010, at 9:00 a.m. Eastern Time to discuss the transaction.  A slide presentation will be available on the company website at>

Simultaneous Webcast

Investors can listen to the call live by logging on to the company's website at www.cephalon.com and clicking on "Investor Information," then "Webcast."  Please click on the link and follow the prompts for registration and access.

If you are unable to listen to the live broadcast, an audio or webcast replay of the call will be available approximately two hours after the event until Midnight EST, February 8, 2010.  To listen to the audio replay, dial 719-457-0820 and use the Conference Code Number 1894492.

Additional information presented on the conference call may be made available on the Investor Information page of the company's website.