Generic drugmaker Teva makes $40 billion offer for rival Mylan

Tue Apr 21, 2015 6:25pm EDT
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By Tova Cohen and Caroline Humer

TEL AVIV/NEW YORK (Reuters) - Teva Pharmaceutical Industries Ltd on Tuesday made an unsolicited $40 billion offer for smaller rival Mylan NV, a bold bid for growth as its lucrative Copaxone drug faces generic competition.

The offer followed weeks of speculation that Israel-based Teva, the world's largest generic drugmaker, would soon target Mylan. Shares of Mylan traded below the offer price of $82 in cash and stock, evidence of investor skepticism that Teva can win over the company, which has set up a defense that includes a poison pill.

Analysts agreed that Teva would need to sweeten its bid to the $90-per-share range. S&P Capital IQ analyst Jeffrey Loo said a viable offer would be $92, about 22 times Mylan's 2015 expected earnings.

"If they raise their bid, they will have more Mylan shareholders pressuring management to come to the table," Loo said. He suggested Teva would need to increase the cash component of the offer, which is now at 50 percent.

Mylan has yet to respond publicly. The company is pursuing an unsolicited, $29 billion bid for Perrigo Co Plc, a major producer of over-the-counter medicines, in an apparent attempt to stave off interest from Teva.

Perrigo has not yet responded to that offer, saying it would consult its board, but a source familiar with the matter said the company was set to reject Mylan's bid as soon as this week.

Mylan Executive Chairman Robert Coury said last week that the company had studied the potential for a deal with Teva and concluded that such a combination "is without sound industrial logic or cultural fit," and would attract antitrust scrutiny.

Teva said its offer should be more attractive to Mylan shareholders than the proposed purchase of Perrigo, representing a 48 percent premium to the company's share price before speculation of a deal surfaced on March 10.   Continued...

Teva Pharmaceutical Industries' Jerusalem oral solid dosage plant (OSD) is seen December 21, 2011. REUTERS/Ronen Zvulun