Investor Paulson & Co. increases Mylan stake amid Teva takeover battle

Mylan investor Paulson & Co. recently increased its stake in the company to 4.5 percent as the drugmaker looks to fend off a $40.1-billion takeover attempt by Teva. A recent report suggested that top Mylan shareholders, including John Paulson's hedge fund Paulson & Co., urged the company to consider Teva's offer. People familiar with the matter have also indicated that Teva has been meeting with Mylan shareholders.

According to a regulatory filing, Paulson's hedge fund acquired 7 million shares last month, boosting its stake to 22 million shares. The $1.6-billion stake represents the hedge fund's second-largest investment in any company, while the fund currently ranks as Mylan's sixth-largest shareholder. In a separate filing, Wellington Management disclosed that it also boosted its stake by 12.6 million shares to 31.7 million, representing a holding of 6.5 percent, making it Mylan's third-largest shareholder.

Last month, Mylan's board unanimously rejected Teva's unsolicited proposal, valued at $82 per share in cash and stock, concluding that it "grossly undervalues" the company. In declining the offer, Mylan executive chairman Robert Coury said the board would not consider negotiations "unless the starting point…is significantly in excess of $100 per share," and reiterated that a merger between the companies could create antitrust concerns (for related analysis, see ViewPoints: Agree to disagree – will FTC considerations scupper a Teva-Mylan deal?).

Meanwhile, Mylan has said it remains committed to completing a merger with Perrigo, although the Irish drugmaker rejected its revised purchase offer consisting of $75 in cash and 2.3 Mylan ordinary shares per Perrigo share. Perrigo claimed that based on Mylan's share price prior to speculation of takeover interest from Teva, the revised bid is actually lower than its initial non-binding proposal, which was also rejected, that offered $205 per share in an unspecified mix of cash and stock, or about $28.9 billion. For additional analysis, see ViewPoints: Perrigo to Mylan: 'your move'.

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