UPDATE 4-Swedish drugmaker Meda spurns Mylan takeover approach

Fri Apr 4, 2014 1:18pm EDT
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(Adds Meda shares, Mylan comment, valuation detail, quote)

By Sven Nordenstam and Mia Shanley

STOCKHOLM, April 4 (Reuters) - Swedish generic drugmaker Meda AB rejected a takeover approach by U.S. rival Mylan Inc to create a combined company worth around $24 billion.

The generic drugs sector has seen a wave of mergers recently as companies selling popular copycat versions of blockbuster medicines have been hit by a dwindling number of patent expirations and are looking to cut costs.

Meda said on Friday it had been contacted about an indicative proposal to combine the two businesses but its board had decided to reject the proposal.

"All continued discussions between Meda and Mylan have been terminated without further actions," it said in a statement.

Shares in Meda closed up 14 percent at 110.6 Swedish crowns valuing the company at 33.4 billion Swedish crowns ($5.1 billion) while Mylan stock rose 4.2 percent to $51.94 by 1627 GMT valuing that firm at $19.3 billion.

Media reports said Mylan was exploring a bid at a significant premium.

"Given that this deal makes too much financial sense for both parties, we believe that there is an exceedingly high likelihood that it still will occur," analysts at Cowen said in a research note.   Continued...