Israeli drugmaker Teva has now stepped out with a $40-billion-bid for Mylan NV, proving the rumour mill right and continuing the current mergers and acquisitions trend in the industry.
In a move that would create a new generics powerhouse with pro forma 2014 annual sales of around $30 billion, Teva has laid $82 per Mylan share on the table in a 50/50 cash/stock transaction valued at just over $40 billion.
Speculation over such a bid has been growing for some time, although Mylan chairman Robert Coury did respond to rumours on Friday by stating that the marriage would be “without sound industrial logic or cultural fit”, indicating that the firm isn’t sold on the idea.
Mylan, which is yet to officially comment on the offer, is currently trying to advance its own unsolicited $30-billion-bid for Ireland-based over-the-counter medicines group Perrigo, which has just unanimously rejected by the latter's Board.
Mylan could now come back with a higher offer for Perrigo, or the whole move could be derailed by Teva’s bid which, it claims, is “a more attractive proposition” for Mylan shareholders.
“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’s chief executive Erez Vigodman, while it 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.
While some industry observers believe Teva will end up bidding higher for Mylan, analysts at Cowen believe the firm has made a “fair, strategically sound and wealth-creating” offer. “There is only one way to unlock the significant inherent value of each entities' generic divisions, and that is to realise the profound potential synergies – and that can only be done together,” they note, adding that both companies “can now move forward as a much stronger entity”.