The battle between Teva Pharmaceutical Industries and Mylan N.V. in Teva’s bid to acquire Mylan took another turn as a Dutch-based foundation exercised a call option to acquire 488 million share of Mylan, thus effectively creating a Dutch version of a poison pill to block Teva’s acquisition efforts. Earlier this year, Teva Pharmaceutical Industries made a takeover bid to acquire Mylan for approximately $43 billion, a deal that Mylan has thus far rejected, and Mylan in turn, made a bid to acquire Perrigo, a deal that Perrigo has thus rejected. In preparing for a possible legal battle, Teva recently purchased a 4.61% stake in Mylan N.V., which enables Teva to begin legal proceedings in a Dutch court (Mylan is headquartered in the Netherlands) regarding its takeover proposal if necessary. Mylan is domiciled in the Netherlands following its $5.3 billion acquisition of Abbott Laboratories’ non-U.S. developed markets specialty and branded generics business earlier this year.

In a statement, Mylan acknowledged the exercise of the full call option by Stichting Preferred Shares Mylan, an independent foundation incorporated under the laws of the Netherlands. The foundation notified Mylan that it has exercised its call option to acquire 488,388,431 Mylan preferred shares, which represents 50% of total issued and outstanding capital of Mylan. The call option agreement had been signed April 3, 2015, between Mylan and the foundation.

“The Stichting Preferred Shares Mylan has formed its independent judgment that Mylan N.V.'s best interests and those of its broader stakeholder constituencies are at risk as a consequence of the uncertainty and threats associated with a possible takeover of Mylan by Teva Pharmaceutical Industries Ltd,” said the foundation in a statement. “The Stichting has come to this conclusion on the basis of the hostile character of Teva's approach, as well as an extensive review of public filings, press statements and investor presentations by both Teva and Mylan, and input received from numerous industry experts, suppliers, customers, consumer groups, patient associations, NGOs [nongovernmental organizations] and similar Mylan stakeholder groups.”

The foundation said that intends to hold the Mylan shares only to “restore stability at Mylan to allow it to concentrate on the management of its business and, alternatively, to give Mylan time to create shareholder value by partnering with industry players who are prepared to make binding commitments which properly recognize the interests of Mylan stakeholders.”

Earlier this year, Teva acquired a 4.6% stake in Mylan to provide Teva with voting rights in Mylan’s proposed acquisition of Perrigo. “The Stichting intends to use the voting rights on its shares to create a level playing field,” said the foundation in the release. “Otherwise, the Stichting does not intend to use its voting powers to influence the outcome of the Mylan shareholder vote on the Perrigo transaction.”

In response, Teva issued the following statement: “We strongly disagree with the stated analysis of Stichting Preferred Shares Mylan and its decision to exercise its call option, which is unwarranted, relies on false assumptions, and risks depriving Mylan stockholders and other stakeholders of the value inherent in a combination of Teva and Mylan,” said Teva in a statement issued on July 23, 2015. “We continue to believe that our proposed transaction offers a compelling opportunity for value-creation and many other benefits for the stockholders, customers, patients, and employees of both companies. We are well advised on Dutch law, including the ability of Mylan stockholders to challenge this action in court and are prepared to take the necessary actions at the appropriate time.”

Source: Teva Pharmaceutical Industries, Mylan  and Stichting Preferred Shares Mylan