Teva $40 Billion Offer to Acquire Mylan

Following weeks of speculation, Teva yesterday made a $40-billion-bid for Mylan NV.

Teva has offered $82 per Mylan share in a 50/50 cash/stock transaction valued at just over $40 billion.

However, the reaction so far to the news suggests that Teva would need to improve on their bid for it to be accepted.  S&P Capital IQ analyst, Jeffrey Loo, commented that a viable offer for Mylan would be $92, around 22 times Mylan’s 2015 expected earnings.

Mylan’s chairman Robert Coury, also commented on rumours surrounding the offer on Friday, stating that the bid would be “without sound industrial logic or cultural fit”, suggesting that Mylan aren’t keen on the idea of the acquisition.

Mylan, who are yet to officially respond to Teva’s offer, is currently trying to advance their own unsolicited $30-billion-bid for over-the-counter medicines group Perrigo.

“Strategic and Financial Benefits” for Teva

Teva’s chief executive, Erez Vigodman, commented that the offer “would provide Teva stockholders with very attractive strategic and financial benefits and Mylan stockholders with a substantial premium and immediate value for their shares.”  Teva was also noted that the combined group would create the broadest portfolio in the industry, with a pipeline of over 400 pending ANDAs and over 80 first-to-files in the US.

Pressure has been growing on Teva to source new revenue as their multiple sclerosis drug, Copaxone, starts to face generic competition this year.

Teva said the purchase would help them to expand their offering of harder-to-produce medical products, such as soft-gel caps, topical and inhalant technologies and injectables, and increase their portfolio of specialty pharmaceuticals.

After the news of the offer, Mylan shares rose 8.9 percent at $74.12 in afternoon Nasdaq trading, while Teva’s shares increased by 2.0 percent to $64.55 on the New York Stock Exchange.

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