Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Mylan Rejects $43B Offer from Israel-Based Teva Cecil Drugmaker Cites 'Problematic Culture'

Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Mylan Rejects $43B Offer from Israel-Based Teva Cecil Drugmaker Cites 'Problematic Culture'

Article excerpt

In the latest twist in the generic drug industry's mega-merger saga, Mylan on Monday formally rejected Teva Pharmaceutical Industries' unsolicited roughly $43 billion takeover proposal, saying the offer "grossly undervalues" the company and would expose Mylan shareholders "to a problematic culture and leadership."

"We do not wish to make Teva's problems Mylan's problems, or to inflict them on Mylan's shareholders and other stakeholders," Mylan chairman Robert Coury wrote in a blistering and lengthy letter to Teva CEO Erez Vigodman, calling Israel-based Teva a "poorly performing troubled company."

The letter was the clearest statement yet that Mylan's board and management - which run the Netherlands-based company from its operational headquarters in Cecil - intends to keep Mylan independent with current management in place. The rejection wasn't a surprise given Mylan's earlier statements that it wasn't interested in hooking up with Teva.

Teva quickly issued a news release Monday saying it was disappointed at the response but undaunted in its effort to join the two generic drug giants.

"The Teva board and management team are fully committed to completing the combination of Teva and Mylan," Mr. Vigodman said.

"Teva stands ready and willing to meet with Mylan and its advisors immediately" to work out a deal, Teva's statement said. "Teva is offering [Mylan shareholders] a substantial premium . and the opportunity to participate in the significant upside potential of a financially and commercially stronger company."

Teva's bid to acquire Mylan for $82 per share in cash and stock was made last week in the midst of Mylan's quest to acquire Irish over-the-counter drug specialist Perrigo, announced earlier in the month.

Mylan's sweetened offer for Perrigo - valued at about $31 billion in cash and stock, and made three days after Teva entered the fray - was rejected as inadequate and inferior to Mylan's initial offer. Mylan's bid for Perrigo had been widely viewed as a pre-emptive maneuver to fend off advances from Teva.

News that Mylan had rejected Teva's offer on Monday sent Mylan shares sharply lower. Shares lost $4.34, or 5.71 percent, to close at $71.72. Shares of Teva fell $2.78, or 4.32 percent, to finish at $61.63, while Perrigo gave up $4.61, or 2.39 percent, to $188.28.

The latest sparring set up the possibly of a protracted battle between Teva, the world's biggest generic drug company, and No. 3 Mylan as analysts speculated on what would happen next.

Canaccord Genuity analyst Corey Davis said in an email that Teva's best strategy would be to appeal directly to Mylan shareholders to get them to put pressure on the board to engage Teva.

"The next step is for Teva to plead its case to investors, but it'll probably take a raise of its $82 offer before anything can materialize," Mr. …

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