Teva Said to Plan Public Mylan Approach as Soon as Today

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What Makes Mylan Worth $40.1B to Teva Pharmaceuticals?

Teva Pharmaceutical Industries Ltd. is preparing an unsolicited offer for rival Mylan NV, people with knowledge of the matter said, in what could be the drug industry’s largest takeover attempt this year.

The Israeli company could make a public bid for Mylan, which has a market value of $33.3 billion, as soon as Tuesday, the people said. Teva is working with Barclays Plc on the approach and has contacted other banks about financing any potential deal, they said, asking not to be identified as the information is confidential.

Teva is still finalizing details of the bid, and it’s possible it won’t proceed, the people said.

Buying Mylan would create a generic powerhouse with more than $27 billion in revenue and re-establish Teva as the predominant giant in the generic drug industry. The Israeli company had been losing market share in recent years to Indian low-cost manufacturers such as Sun Pharmaceutical Industries Ltd.

Teva rose 2.4 percent to 256.9 shekels as of 10:35 a.m. in Tel Aviv, giving it a market value of 219 billion shekels ($55.5 billion). Perrigo Co., the target of an unsolicited $28.9 billion bid by Mylan this month, dropped 2.8 percent to 758.3 shekels.

Mylan has taken the unusual step of publicly rebuking Teva’s offer in advance: In a statement on Friday, after Bloomberg reported that Teva was considering the bid, Mylan said it’s not interested in a sale and doesn’t expect a potential combination to clear antitrust hurdles.

Unwelcome Approach

“We have studied the potential combination of Mylan and Teva for some time and we believe it is clear that such a combination is without sound industrial logic or cultural fit,” Robert J. Coury, Mylan’s executive chairman, said last week.

Denise Bradley, a spokeswoman for Teva, and a representative for Barclays declined to comment. Nina Devlin, a spokeswoman for Mylan, didn’t immediately respond to an e-mail seeking comment outside regular business hours.

“We would hope that like Mylan did last week, Teva will take the opportunity to clear the air this week on its current thinking since Teva now finds itself in a position of being spurned by Mylan for a deal Teva has not even formally proposed,” David Maris, an analyst at BMO Capital Markets in New York, said in a note yesterday.

Earnings Gain

Analysts have long beat the drums for a Teva purchase of Mylan. An all-stock offer valuing Mylan at $90 a share -- about a 30 percent premium -- would deliver annual earnings of about $5.60 a share next year, according to data compiled by Bloomberg.

That projection uses an estimate by Ken Cacciatore, an analyst at Cowen Group Inc., that a combination would create $2 billion in synergies. If Teva could partially fund the transaction with cash or debt, the earnings gain would be even larger.

Mylan’s unsolicited bid for Perrigo is seen by many as a trigger for Teva to act before Mylan becomes even larger.

An unwelcome offer by Teva would be the latest in similar moves among drug companies, which are in the midst of a takeover spree that led to an unprecedented $273 billion of deals last year. Buyers rebuffed in their approaches recently include Pfizer Inc., whose offer for AstraZeneca Plc would have been the drug industry’s largest takeover, and Valeant Pharmaceuticals International Inc., which tried to acquire Allergan Inc.

Like other buyers, Teva is looking for new products as a key drug faces generic competition, and acquiring Mylan would help it cut costs. Teva’s multiple sclerosis treatment, called Copaxone, will face generic rivals this year -- including possibly one produced by Mylan.

Mylan, managed from Canonsburg, Pennsylvania, bought European assets from Abbott Laboratories last year and adopted a Dutch legal address, lowering its corporate tax rate.

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