Mylan board rejects Teva's takeover proposal

Mylan said Monday that its board of directors unanimously rejected an unsolicited expression of interest from Teva to acquire the company, concluding that the offer "grossly undervalues" the drugmaker. The bid, which was announced on April 21, was valued at $82.00 per share, or around $40.1 billion, comprised of approximately 50 percent cash and 50 percent stock.

According to Mylan, the offer includes "low-quality, high-risk Teva stock," while it would also expose the company "to a problematic culture and leadership with poor record of delivering shareholder value." Mylan added that the proposed combination also carries "significant antitrust risk and would result in massive consolidation of supply and manufacturing, creating implications for pricing power and shortages."

Mylan's board determined that the offer "did not meet any of the key criteria that would cause [it] to depart from the company's successful and longstanding standalone strategy, and consider engaging in discussions to sell." Executive chairman Robert Coury added "our board will certainly not consider engaging in discussions to sell the company unless the starting point of the discussions is significantly in excess of $100 per share." Coury indicated that Mylan would also only consider a takeover if the acquirer assumed all the regulatory risk, noting that Teva "would create significant antitrust concerns."

In response, Teva said it was already working with antitrust regulators and was confident it could get approval. Erez Vigodman, CEO of the Israeli drugmaker, said he was "disappointed that Mylan has formally rejected our proposal," although he suggested that the "board and management team are fully committed to completing the combination of Teva and Mylan." Vigodman remarked "we are eager to work with Mylan...to complete a transaction."

However, Mylan said that it remains committed to its firm offer for Perrigo. Last week, Perrigo rejected Mylan's second offer of $60 in cash and 2.2 Mylan ordinary shares for each Perrigo ordinary share, following its decision to dismiss a prior non-binding proposal of $205 per share of cash and stock, or approximately $28.9 billion, as being too low.

Perrigo said that based on Mylan's share price prior to rumours that Teva was interested in a takeover of the company, Mylan's second offer, which it valued at $181.67, was lower than its prior unsolicited proposal. Some analysts have suggested that Mylan has pursued Perrigo as a defensive move against a takeover by Teva (for related analysis, see ViewPoints: Perrigo to Mylan: 'your move').

For further analysis, see ViewPoints: Agree to disagree – will FTC considerations scupper a Teva-Mylan deal?

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