Update

Teva bids $40bn for Mylan in proposed generics megamerger

By Dan Stanton contact

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Teva's $50bn bid would create a global generics giant
Teva's $50bn bid would create a global generics giant
A merger with Mylan would “transform the global generics space” says Teva, which has entered a $40bn bid as an alternative to the recently proposed Mylan-Perrigo deal.

There has been much speculation as to whether Israel-headquartered firm Teva would try to acquire fellow generics giant Mylan, and Tuesday morning the firm announced a proposal to acquire all of the outstanding shares of Mylan at $82 per share, roughly equating to $40bn.

“Our proposal would provide Teva stockholders with very attractive strategic and financial benefits and Mylan stockholders with a substantial premium and immediate value for their shares,”​ said Teva CEO Erez Vigodman.

Furthermore, he added, it will present “the opportunity to participate in the significant upside potential of the combined company – one that would transform the global generics space and leverage it to hold a unique leadership position in the pharmaceutical industry.”

Two weeks ago, Mylan made a $29bn (€27bn) bid​ for fellow generics and OTC firm Perrigo, and at the time, some investors wondered whether Teva would make a counter-bid or attempt to court Mylan directly.

Vigodman said that while he has “long respected Mylan’s business,”​ Teva’s proposal “represents a significantly more attractive alternative for Mylan and its stockholders than Mylan’s proposed acquisition of Perrigo.”

Global network

In a letter to Mylan’s Executive Chairman Robert Coury dated April 21, Vigodman said a successful deal would put the merged company “in a position to leverage its significantly more efficient and advanced infrastructure, with enhanced scale, production network, end-to-end product portfolio, commercialization capabilities and geographic reach.”

As of last year, Teva’s network comprises of 50 finished dosage manufacturing sites (plus two under construction), 21 active pharmaceutical ingredient (API) sites, plus 20 pharmaceutical R&D centres.

Mylan’s operating network would add 24 global sites which make oral solid dosages, injectables, and transdermal and respiratory systems, plus a further nine API and intermediate plants located in India.

Teva has already shuttered several of its own plants – including facilities in Sellersville​, Pennsylvania, and Irvine​, California – as part of a cost-cutting scheme intended to slash annual spending by $2bn a year by 2017.

Furthermore, Vigodman said last July​ the firm could close or divest up to half of its facilities – especially its generics manufacturing sites - and remain “efficient, productive, and of course of the highest quality.”

Perrigo no go

Mylan's decision could be swayed towards Teva following news also on Tuesday that Perrig's Board of Directors has unanimously rejected the proposed acquisition.

"The Board believes the Proposal substantially undervalues Perrigo and its growth prospects,"​ said Perrigo CEO Joseph Papa.

"The Company has a strong independent future and is well positioned to continue to drive superior growth and shareholder value and provide high ‘Quality Affordable Healthcare Products’ to customers and consumers globally."

Related topics: Ingredients, Mergers and Acquisitions

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