Teva Reiterates Interest in Acquiring Mylan

Teva Pharmaceutical Industries Ltd. has reiterated its interest in acquiring Mylan N.V. despite Mylan’s rejection of the company’s approximate $43 billion offer. Teva Pharmaceutical Industries President and Chief Executive Officer Erez Vigodman sent a letter on April 29, 2015 to Mylan N.V. Executive Chairman Robert J. Coury to outline Teva’s interest in acquiring Mylan and to address points made by Coury in publicly rejecting Teva’s approximately $43 billion bid to acquire Mylan as well as Mylan’s revised offer to acquire Perrigo that Mylan made on April 29, 2015.

“Our cash and stock offer of $82.00 per share implies a total equity value for Mylan of approximately $43 billion. This provides your stockholders with a 48.3% premium to the unaffected Mylan stock price of $55.31 on March 10, 2015, after which there was widespread speculation of a transaction between Teva and Mylan,” said Vigodman in his letter. “This same view of your unaffected price, and the implied premium in our offer, was publicly shared repeatedly by Perrigo, a company with an independent, and highly relevant, perspective on Mylan's value. Moreover, we note your willingness to cede substantial ownership of Mylan’s equity to Perrigo stockholders at a substantial discount to our premium offer, let alone to your stated minimum price for engaging with us. Your increased offer for Perrigo today [Mylan revised its offer on April 29, 2015] takes away even more economic value from your stockholders in attempting to pursue a transaction that is already challenged, financially and otherwise. Based on market prices, Wall Street research estimates, and a wide range of accepted valuation methodologies, our $82.00 per share offer represents extremely attractive, immediate value for Mylan stockholders. Rather than being ‘value and growth destructive’ as you suggest, the consensus is that the combination of our companies will allow the Mylan and Teva stockholders to share in the profound value creation arising from the significant synergies and strategic fit inherent in this transaction.”

Vigodman also addressed concerns by Mylan that a proposed combination of Teva and Mylan may not receive regulatory approval or would require divestments to achieve regulatory approval. “Teva fully expects that the regulatory reviews of a Mylan acquisition can be completed in 2015,” said Vigodman in his letter. “Further, Teva is confident it can meet the very same seven-month timing window Mylan laid out for its Perrigo offer. To this end, Teva filed for premerger notification under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 on April 22, 2015, and has likewise started the pre-notification process with the European Commission.”

“Teva has a successful track record of timely clearances in similar situations,” Vigodman continued. “In each of our acquisitions of IVAX, Barr and Cephalon, we quickly agreed to necessary divestitures and other remedies and were able to close in less than six months. Further, we are confident that any potential divestitures would be manageable. Most of Mylan's drug products do not overlap with Teva's, and the majority of those that do overlap have a number of other competitors and should not raise antitrust issues. Teva is prepared to make the divestitures needed to secure clearances and is actively identifying both potential divestitures and potential acquirers for divested assets. More broadly, a combination of our two companies will leave over a dozen significant sellers of generic prescription drugs, in the face of a customer base that continues to consolidate and gain in power. Additionally, there are very few products sold by both Mylan and Teva that are on the FDA's ‘drug shortage’ list, and where these overlaps do exist, we do not foresee meaningful regulatory issues given differences in dosage strengths and/or the number of other sellers that exist. In summary, Teva does not see regulatory clearances as a meaningful barrier to a transaction with Mylan, and we expect that the proposed transaction can be completed by year-end 2015. We are prepared to engage with you and your advisors to discuss our solutions and provide you with any clarity that you seek on this subject.”

Lastly, Vigodman addressed concerns raised by Mylan that a proposed combination of Mylan and Teva would not be a good strategic and cultural fit. “We are determined to capture the full potential value resulting from this transaction by having the best people from both companies working for a much stronger combined entity,” said Vigodman in his letter to Mylan. “Teva is meritocratic, fair and committed to identifying the best people and best assets across each company.The strategic fit is likewise compelling. The proposed combination of Teva and Mylan is fully consistent with our clearly articulated strategy to advance both our generics and specialty pharmaceutical businesses. The proposed combination will create an industry-leading company, well positioned to transform the global generics space and create a unique and differentiated business model, leveraging on its significant assets and capabilities in generics and specialty. The transaction is not about size for size's sake, but rather about the unparalleled strategic and financial fit of the two companies for the benefit of all stakeholders. The two companies' capabilities in product portfolios, complex technologies and marketing are highly complementary. Together, we will become more efficient, allowing us to generate significant value, penetrate new markets and develop new capabilities. The opportunities for substantial achievable cost synergies and tax savings are estimated to be approximately $2 billion annually and are expected to be largely achieved by the third anniversary of the closing of the transaction. In addition, the combination will position the combined company to be a world leader in positively impacting the patients and communities we serve by providing many more people around the world with affordable and more accessible treatments.” 

Source: Teva Pharmaceutical Industries

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