We Don’t Come So Cheap, Mylan Tells Teva

(Reuters/Hamodia) -

Mylan NV rejected Teva Pharmaceutical Industries unsolicited $40 billion takeover offer on Monday, saying it was too low and calling Teva stock an “unacceptable” currency.

Teva, the world’s biggest maker of generic drugs, last week offered $82 per share in cash and stock for smaller rival Mylan.

Mylan, which is pursuing its own takeover of Perrigo Co Plc (PRGO.N), had been expected to reject the offer after indicating that such a combination would not be a good fit.

In response to the Mylan rejection, Teva said it was standing by its cash and stock offer.

Mylan shares fell 3.48 percent to $73.44 on the Nasdaq, and Teva fell 2.3 percent to $62.91 on the New York Stock Exchange.

Mylan Executive Chairman Rob Coury said in a lengthy letter to Teva released on Monday that Mylan would not consider any discussions unless “the starting point” was “significantly in excess of $100 per share.”

Wall Street analysts had said Mylan might be looking for $90 to $95 per share and an increased cash component.

Coury said in the letter, which described Teva’s culture as “dysfunctional,” that Teva’s stock was an unacceptable currency because it had underperformed its peers, including Mylan, over the last three years.

“The Mylan board has no interest in considering an expression of interest that… requires Mylan shareholders to accept what we believe is low-quality and high-risk currency in the form of Teva shares,” it said.

In addition, it said its customers and partners had voiced concerns about Teva and did not support the possible combination.

Mylan said it remained committed to its $31 billion offer for Perrigo, which has been rejected. Mylan plans to take the offer directly to Perrigo shareholders in what is set to be one of the most high-profile hostile takeover attempts of the year.

Mylan’s pursuit of Perrigo, a major producer of over-the-counter drugs, is widely seen as an attempt to fend off Teva.

“While we are disappointed that Mylan has formally rejected our proposal, the Teva board and management team are fully committed to completing the combination of Teva and Mylan,” Teva CEO Erez Vigodman said in a statement.

An analyst for Swiss investment bank Julius Baer told Globes on Tuesday that she approved the Teva strategy, but not at any price.

“Mylan Laboratories is a good acquisition target for Teva and in my opinion, Teva’s shareholders will welcome it, but it also depends on the price Teva has to pay for Mylan shares,” said Lilian Montero at Julius Baer.

But it’s not a be-all end-all deal for either company. “In case the Teva–Mylan combination would not occur, both companies would continue pursuing other strategic deals, in my view,” Montero says.

“Mylan announced its intention of acquiring Perrigo in order to protect itself against an acquisition, and that’s not the best strategy for its shareholders,” Montero states. She mentions that Mylan expects over $800 million in synergy from Perrigo within four years of the acquisition. “Mylan management is very good, and will be able to achieve this target, but will its shareholders want to wait four years? I see no reason for them to wait when they can get a higher price from Teva in a shorter time.”