The board of directors of Mylan Laboratories has unanimously rejected the bid by Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) to acquire the company for $41 billion. The board stated, "Teva's proposal grossly undervalues Mylan."
This development means that Teva will probably raise its bid, as predicted last week by analysts when Teva put its bid on the table. At the same time, this is only the position of Mylan's board of directors, while Teva's bid is hostile, and therefore aimed at Mylan's shareholders.
Last week, following a great deal of speculation on the subject, Teva submitted an official offer to aquire Mylan, its competitor, at $82 a share (a 21% premium of on the market price), amounting to $41 billion. Payment for the acquisition would be 50% in cash and 50% in shares. Mylan's Nasdaq market cap is $34 billion. This would be the biggest takeover in the global pharmaceutical market this year.
Mylan opposes the deal, while seeking to aquire Perrigo Company (NYSE:PRGO; TASE:PRGO) for a total of $31.8 billion. Mylan is offering $60 in cash and 2.2 of its own shares for each share for Perrigo, reflected a $222 share price for Perrigo. Perrigo rejected the offer.
Mylan executive chairman Robert J. Coury said today, "Our board has a very important fiduciary obligation to protect the best interests of the Company's shareholders and other stakeholders, and has always been open to considering all paths forward in that regard, and this situation is no different. However, that does not mean we will entertain offers that grossly undervalue the company, and leave our shareholders and other stakeholders exposed to serious risk."
"After thorough consideration, Mylan's board unanimously determined that Teva's proposal grossly undervalues Mylan, and would require Mylan's shareholders to accept what we believe are low-quality Teva shares in exchange for their high-quality Mylan shares in a transaction that lacks industrial logic and carries significant global antitrust risk. In addition, we also believe that the proposal does not address the serious challenges of integrating two fundamentally different and conflicting cultures under a Teva Board and leadership team with a poor record of delivering sustainable shareholder value. We believe that these challenges would make it very difficult to generate value from this combination for Mylan shareholders."
"Furthermore, the proposal contains nothing meaningful indicating why a combination with Teva would be in the best interest of Mylan's employees, patients, customers, communities and other stakeholders. In summary, the board determined that Teva's expression of interest is not in the best interests of Mylan, its shareholders or other stakeholders, and we believe that this is only a mere attempt by Teva to frustrate and distract Mylan from its business plan and strategy."
Published by Globes [online], Israel business news - www.globes-online.com - on April 27, 2015
© Copyright of Globes Publisher Itonut (1983) Ltd. 2015