As mooted earlier in the week, the European Commission (EC) has given its approval for Israel-based Teva’s planned $40.5 billion acquisition of the generics arm of Ireland-domiciled Allergan.

Strings attached to the deal stipulate that the company divest certain assets, including the bulk of both merger partners’ generics businesses in the UK and Ireland and Teva’s generics portfolio in Iceland.

Separately, the generics company’s parent, Allergan, is merging with Pfizer in a $150 billion transaction that sees the Dublin-based drugmaker officially taking over the US pharmaceuticals giant.

Following “a thorough market investigation,” in which the Commission said it assessed whether the combination of the two companies’ generics assets would affect competition in some European Economic Area (EEA) countries beyond the markets for individual molecules, the EU antitrust body said it found concerns in the three countries mentioned, where Teva and Allergan were the market leaders.

If Teva’s bid wins approval of regulatory authorities in other markets, the deal, the largest in Israel's corporate history, will give the Israeli drugmaker – already a generics powerhouse – greater economies of scale, boosting its profitability in the low-margin generic drugs business.

The combined company would have pro forma revenues of $26 billion and EBITDA of $9.5 billion in 2016. Teva said it expected cost synergies and tax savings of $1.4 billion annually by the third anniversary of the transaction.

US say antitrust approval is still out and reports say approval by the US Federal Trade Commission – even with divestments – may be harder to obtain.