Generic drugmaker Teva makes $40bn offer for rival Mylan

Generic drugmaker Teva Pharmaceutical Industries Ltd yesterday proposed buying Mylan for $40 billion, saying it was a better deal than the smaller rival's offer to buy Perrigo.

The bid comes after weeks of speculation that Teva, the world’s largest generic company, would make a bid for Mylan.

Teva said the stock-and- cash offer of $82 a share represented a 48 per cent premium to Mylan’s stock price on March 10th, which it said was the last day of trading prior to the widespread speculation.

Shares of Mylan were up 8.4 per cent at $73.76 in morning Nasdaq trading, while Teva rose 1.7 per cent to $64.34 on the New York Stock Exchange. Perrigo fell 1.8 per cent to $194.77.

Analyst Gilad Alper of the Excellence Nessuah brokerage, in Petach Tikva, near Tel Aviv, said a Teva-Mylan combination would create a large company that lacks assets to drive short-term growth.

Alper said he thought Teva would probably increase its $82-per-share offer and described Mylan’s stock reaction as lacklustre. “I would have thought the price would have jumped a little higher,” he said.

Run

A Teva-Mylan deal would be the largest in a recent run of multibillion-dollar pharmaceutical deals, including those of AbbVie Inc with Pharmacyclics and

Valeant Pharmaceuticals

with Salix.

Mylan was not immediately available for comment but has said it is not interested in a deal. Executive chairman Robert Coury said in a statement on Friday that Mylan was committed to the $29 billion offer it made earlier this month for Perrigo.

In a letter to Mr Coury, Teva chief executive officer Erez Vigodman urged the company to meet to address the concerns it has voiced about a combination, such as doubts that it would pass antitrust review. Mr Vigodman said Teva believed the combination would gain regulatory clearance.

Poison pill

Mylan has adopted a poison-pill defence, a shareholder rights plan that makes a hostile takeover less likely because it triggers the sale of discounted stock that dilutes share value.

Perrigo has not commented on the deal since April 8th, when it said it would take the Mylan offer to its board.

The combined company would have annual revenue of $30 billion, and Teva said it would expect $2 billion in cost savings within three years, including from taxes.

Teva is based in Israel, while Mylan recently moved its headquarters from the US to the Netherlands, where corporate taxes are lower.

Teva said Mylan would add to its earnings starting in the first year.

Teva is being advised by Barclays and Greenhill & Co Inc, and its lawyers are Kirkland & Ellis LLP, Tulchinsky Stern Marciano Cohen Levitski & Co, De Brauw Blackstone Westbroek NV and Loyens & Loeff NV. – (Reuters)