Mylan's Dutch foundation moves to block hostile Teva bid

Stichting Preferred Shares Mylan, an independent Dutch foundation set up by Mylan as a way to thwart a potential takeover by Teva, confirmed Thursday that it exercised its call option to acquire preferred shares in the generic drugmaker. The foundation, which can issue and acquire preference shares in the generic drugmaker when it deems its "stakeholder interests" are at risk, stated that Mylan and Teva follow different strategies and that it planned to use its voting rights to oppose the Teva bid.

"Mylan and Teva, although both large and successful players in the global market for generic products, have a highly dissimilar business approach, culture, financial model and related management compensation schemes," the foundation said. The dutch group, which will acquire 488 388 431 Mylan preferred shares under the agreement, allowing it to control half of the company, said it doesn’t plan to keep the preferred shares any longer than necessary.

Meanwhile, Teva responded that "we strongly disagree with the stated analysis of Stichting Preferred Shares Mylan and its decision to exercise its call option, which is unwarranted, relies on false assumptions, and risks depriving Mylan stockholders and other stakeholders of the value inherent in a combination of Teva and Mylan." Teva added "we continue to believe that our proposed transaction offers a compelling opportunity for value-creation and many other benefits for the stockholders, customers, patients, and employees of both companies… and are prepared to take the necessary actions at the appropriate time."

Teva currently owns a 4.6-percent stake in Mylan, which sources suggest is enough under Dutch law to initiate proceedings at Amsterdam’s Enterprise Chamber, a special appeals court for shareholder disputes. It is not yet clear whether Teva will pursue this avenue with the courts.

For its part, Mylan has indicated that it plans to move forward with its proposed takeover of Perrigo in a deal valued at approximately $33 billion. The company is planning to hold a shareholder meeting shortly to ask investors to vote in favour of that proposal, which Perrigo has previously rejected.

Mylan’s plan to acquire Perrigo is backed by Abbott, which owns a 14.5 percent stake in Mylan. In a call to investors, Abbott CEO Miles White said "I like the strategy that Mylan’s pursuing, and I support it and endorse it as a shareholder," adding that "Teva has other desires for Mylan. But my own assessment of that as a shareholder of Mylan is that's not likely to happen." White further remarked "I wanted to make it clear where the largest investor in Mylan stood because I think that will influence other investors to take a closer look."

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