Mylan Disagrees With Itself in Effort to Spurn Teva Takeover

Mylan NV, the generic drugmaker, is acting like two companies: One has big problems with a takeover offer that’s below $100 a share. The other would be delighted with a share price of $73.33.

Mylan is on the offensive against Teva Pharmaceutical Industries Ltd., the Israeli rival that’s been bidding for it. In a letter this week, the company said Teva’s opening offer of $82 a share, “grossly undervalues” it and the buyer shouldn’t even bother coming back until it’s prepared to pay “significantly in excess of $100 per share.”

Elsewhere, the company has put a very different price on itself. Mylan outlined a performance-based incentive plan for executives, which -- among other things -- includes a $73.33 price target that was reiterated in a 10-K filing this week.

Reaching such a price, as well as an adjusted earnings per share figure of $6, by the end of 2018 would represent an “extraordinary achievement by our leadership team in such a short period of time,” the company said.

The disconnect is explained in part by Mylan’s determination to rebuff Teva. In its eight-page missive, it accuses the Israeli company of ineptitude, laziness, disingenuousness and bumbling racism.

Control Premium

Certainly, any acquirer has to pay what’s known as a control premium to take over a rival. As recently as April 7, before Teva’s approach, Mylan was trading at $59.57 -- meaning Teva’s opening offer was already 38 percent higher.

Mylan’s two valuations come from either side of the Atlantic. The letter to Teva was sent from the company’s tax headquarters in the English town of Potters Bar. The 10-K was filed from Canonsburg, Pennsylvania -- where the company employs actual workers and produces drugs.

Perhaps that’s another explanation for the split. The strain of having to manage a long-distance relationship with itself may have gotten to Mylan, causing a cognitive dissonance whereby it’s simultaneously entertaining the ideas that, if it totally crushes it, it should be worth $73.33 a share, and anyone who thinks it is worth as little as $82 a share is clinically moronic.

Its a situation that Teva will surely try to exploit.

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