Israeli drug giant Teva Pharmaceutical Industries dropped its hostile bid for Mylan and instead agreed to buy the global generic-drug business of Allergan for $40.5 billion Monday. Teva's and Allergan's stocks jumped to new highs while Mylan's dropped 14.5% to 56.35. Teva (TEVA) agreed to pay $33.75 billion in cash and $6.75 billion in stock for Allergan's (AGN) Actavis business, with Allergan retaining 50% of the future money from Teva's generic lenalidomide, better known as Celgene's (CELG) blockbuster cancer drug Revlimid, which is expected to go off patent by the end of the decade. At the same time, Teva abandoned its attempt to acquire generic-drug titan Mylan (MYL), which had been resisting mightily since Teva proposed to acquire it for $40 billion back in April. "Despite our ... conviction that we ultimately would have succeeded in acquiring Mylan, we believe we have an even greater opportunity to create compelling, sustainable value for Teva's stockholders through our transaction with Allergan — and we acted quickly to seize the opportunity," Teva CEO Erez Vigodman said. "Our agreement with Allergan will . .. position us well. Teva said it now expects 2016 revenue of $26 billion — up from $20.3 billion last year — with double-digit percentage EPS accretion. The firm said it expects 20% EPS accretion in the second and third years after the close, which is expected in the first quarter of next year. Teva also issued... More