Drugmaker Teva makes $40B bid for rival Mylan

An employee collects newly-manufactured pills at Teva Pharmaceutical Industries headquarters in Jerusalem, Israel.
Adam Reynolds | Bloomberg | Getty Images
An employee collects newly-manufactured pills at Teva Pharmaceutical Industries headquarters in Jerusalem, Israel.

Generic drugmaker Teva Pharmaceutical Industries on Tuesday 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 percent premium to Mylan's stock price on March 10, which it said was the last day of trading prior to the widespread speculation.

Shares of Mylan were up 8.4 percent at $73.76 in morning Nasdaq trading, while Teva rose 1.7 percent to $64.34 on the New York Stock Exchange. Perrigo fell 1.8 percent 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 very large company that lacks assets to drive short-term growth.

Teva proposes Mylan acquisition
Teva proposes Mylan acquisition   

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

A Teva-Mylan deal would be the largest in a recent run of multibillion-dollar pharmaceutical deals, including those of AbbVie 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 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. Vigodman said Teva believed the combination would gain regulatory clearance.

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Mylan has adopted a poison pill defense, 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 8, 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 United States 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, and its lawyers are Kirkland & Ellis, Tulchinsky Stern Marciano Cohen Levitski, De Brauw Blackstone Westbroek, and Loyens & Loeff.