April 4 (Bloomberg) -- Mylan Inc., the biggest U.S. generic-drug maker, was rejected in its bid to buy Meda AB, the Swedish pharmaceuticals maker valued at about $4.5 billion.
Meda’s board reject the proposal and all “discussions between Meda and Mylan have been terminated without further actions,” Solna, Sweden-based Meda said in the statement. The companies didn’t say whether Mylan’s offer was too low or if Meda rejected the approach for another reason.
The combination would have fulfilled to Mylan’s stated aim to do a large transaction this year, as it pursues growth in a generics industry that is consolidating. Mylan’s top competitors, Actavis Plc and Teva Pharmaceutical Industries Ltd., have grown through acquisitions, expanding their product lines to include specialty and branded drugs.
“It makes a lot of strategic sense, and Mylan’s been crystal clear that they want to do a deal,” said Jeff Jonas, a portfolio manager of the Gabelli Healthcare & Wellness Trust in Rye, New York. The fund owns Mylan shares.
Meda Chairman Bert-Ake Eriksson didn’t immediately respond to a request for further comment on the statement. Canonsburg, Pennsylvania-based Mylan “is considering a wide range of possible opportunities,” Nina Devlin, a spokeswoman, said in a statement. She declined to comment on “potential specific transactions.”
Meda would have helped Mylan expand in respiratory and branded dermatology generics and strengthen its position in emerging markets and Europe, Thomas Maul, an analyst in Frankfurt at DZ Bank AG, said in a note to investors today before Meda’s statement. A deal also may have helped the U.S. company lower its tax rate, he said.
Meda had been valued at 29.3 Swedish kronor ($4.5 billion) when trading was halted prior to the company’s statement. Once trading resumed, Meda shares rose 14 percent to 110.6 kronor in Stockholm. It was the biggest one-day gain since October 2008.
Mylan gained 1.5 percent to $50.63 in New York.
Actavis, once its announced $25 billion acquisition of Forest Laboratories Inc. is completed, will surpass Mylan among the biggest generic and specialty drugmakers worldwide, Jonas said.
“Recently they’ve fallen behind, just because there’s been so much dealmaking by the other players,” Jonas said in a telephone interview. While the industry is in a period of rapid change and consolidation, “It does seem like you’re going to need scale and global reach.”
Repeated speculation about a takeover has buoyed shares of Meda in recent years. Sun Pharmaceutical Industries Ltd. considered a bid for Meda last year, two people with knowledge of the matter said at the time. Meda said it wasn’t in talks. In 2011, Valeant Pharmaceuticals International Inc. approached Meda about a takeover, two people with knowledge of the matter said at the time. Meda denied it had been approached.
The Financial Times and the Wall Street Journal reported yesterday that Mylan was considering making an offer and had hired advisers. Trading in Meda shares was halted by Nasdaq OMX Stockholm pending the statement. The stock has risen 19 percent this year, touching a seven-year high on April 1.
Mylan Chief Executive Officer Heather Bresch has said the company is willing to look at larger deals, in both generic drugs and branded medicines. The company has also been looking at assets to buy that would help expand its global sales power, with commercial operations in new countries.
Mylan’s top competitors, Actavis and Teva, have grown through purchases, expanding their product lines to include specialty and branded drugs. Actavis, based in Dublin with operations in New Jersey, said on Feb. 18 it agreed to buy Forest in a deal anticipated to be completed by midyear.
Sweden’s billionaire Olsson family, which owns shipping, offshore-drilling, finance and property companies, holds a 23 percent stake in Meda’s Class A shares through Stena Sessan Rederi AB. Eriksson is Stena Sessan’s CEO.
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