Mylan was widely expected to turn down Teva’s takeover offer, but in a colourful letter from the Dutch firm’s chairman has made its lack of interest abundantly clear.
Aside from saying that Teva’s $82-per-share offer grossly undervalues Mylan, Robert Coury writes that “we do not wish to make Teva’s problems Mylan’s problems, or to inflict them on Mylan’s shareholders and other stakeholders.”
In the letter to Teva chief executive Erez Vigodman, Coury alludes to the recent feuding within Teva’s management team that resulted in the departure of former CEO Jeremy Levin last year and the resulting “strategic confusion.”
The way Teva approached the offer – publicly before any opportunity to discuss it behind closed doors – “continues to beg questions about Teva’s credibility” and suggests claims of a new culture at the company are unfounded, he continues.
The public approach differed markedly from Mylan’s own overtures to Perrigo which grew out of prior private meetings, according to Coury. However, it has to be said the end-result was the same – with Perrigo rejecting Mylan’s latest offer yesterday.
Teva says it is committed to completing the deal as soon as possible, claiming its cash and stock offer has a value of around $43bn, would create a $30bn-a-year combined company and provide $2bn a year in cost savings.
“A transaction with Teva would deliver more value to Mylan stockholders than any other alternative,” it said in a formal statement issued yesterday.
Coury begs to differ, pointing to the recent approval of the first generic version of the Israeli firm’s multiple sclerosis blockbuster Copaxone (glatiramer acetate) as well as “constantly changing and flip flopping strategy, rotating leadership, shareholder outrage and a flat to negative growth outlook.”
Mylan’s board has laid out the minimum requirements for the start of proposals with any suitor at $100 per share, but suggested “industrial logic and cultural fit” are more important and lacking in Teva’s bid and took pain to point out that the response does not constitute a counter-proposal or negotiating tactic.
“Acquiring a great company like Mylan would not fix a struggling Teva,” they note.
Consummating a deal with a hostile Mylan will be particularly difficult for Teva as the Dutch firm recently instigated a poison pill defence based on the issuance of preferred shares to an independent foundation that would dilute shareholder voting rights.