Mylan Disagrees With Itself in Effort to Spurn Teva Takeover
2015-05-01 23:01:00.829 GMT
By Ed Hammond
(Bloomberg) -- Mylan NV, the generic drugmaker, is acting
like two companies: One has big problems with a takeover offer
that’s below $100 a share. The other would be delighted with a
share price of $73.33.
Mylan is on the offensive against Teva Pharmaceutical
Industries Ltd., the Israeli rival that’s been bidding for it.
In a letter this week, the company said Teva’s opening offer of
$82 a share, “grossly undervalues” it and the buyer shouldn’t
even bother coming back until it’s prepared to pay
“significantly in excess of $100 per share.”
Elsewhere, the company has put a very different price on
itself. Mylan outlined a performance-based incentive plan for
executives, which -- among other things -- includes a $73.33
price target that was reiterated in a 10-K filing this week.
Reaching such a price, as well as an adjusted earnings per
share figure of $6, by the end of 2018 would represent an
“extraordinary achievement by our leadership team in such a
short period of time,” the company said.
The disconnect is explained in part by Mylan’s
determination to rebuff Teva. In its eight-page missive, it
accuses the Israeli company of ineptitude, laziness,
disingenuousness and bumbling racism.
Control Premium
Certainly, any acquirer has to pay what’s known as a
control premium to take over a rival. As recently as April 7,
before Teva’s approach, Mylan was trading at $59.57 -- meaning
Teva’s opening offer was already 38 percent higher.
Mylan’s two valuations come from either side of the
Atlantic. The letter to Teva was sent from the company’s tax
headquarters in the English town of Potters Bar. The 10-K was
filed from Canonsburg, Pennsylvania -- where the company employs
actual workers and produces drugs.
Perhaps that’s another explanation for the split. The
strain of having to manage a long-distance relationship with
itself may have gotten to Mylan, causing a cognitive dissonance
whereby it’s simultaneously entertaining the ideas that, if it
totally crushes it, it should be worth $73.33 a share, and
anyone who thinks it is worth as little as $82 a share is
clinically moronic.
Its a situation that Teva will surely try to exploit.
For Related News and Information:
Mylan Board Unanimously Rejects Teva Takeover Bid as Too Low
Teva Doesn’t See Antitrust or Culture Issues With Mylan Proposal
Top Stories:TOP<GO>
To contact the reporter on this story:
Ed Hammond in New York at +1-212-617-1963 or
ehammond12@bloomberg.net
To contact the editors responsible for this story:
Mohammed Hadi at +1-212-617-2914 or
mhadi1@bloomberg.net
Elizabeth Wollman
2015-05-01 23:01:00.829 GMT
By Ed Hammond
(Bloomberg) -- Mylan NV, the generic drugmaker, is acting
like two companies: One has big problems with a takeover offer
that’s below $100 a share. The other would be delighted with a
share price of $73.33.
Mylan is on the offensive against Teva Pharmaceutical
Industries Ltd., the Israeli rival that’s been bidding for it.
In a letter this week, the company said Teva’s opening offer of
$82 a share, “grossly undervalues” it and the buyer shouldn’t
even bother coming back until it’s prepared to pay
“significantly in excess of $100 per share.”
Elsewhere, the company has put a very different price on
itself. Mylan outlined a performance-based incentive plan for
executives, which -- among other things -- includes a $73.33
price target that was reiterated in a 10-K filing this week.
Reaching such a price, as well as an adjusted earnings per
share figure of $6, by the end of 2018 would represent an
“extraordinary achievement by our leadership team in such a
short period of time,” the company said.
The disconnect is explained in part by Mylan’s
determination to rebuff Teva. In its eight-page missive, it
accuses the Israeli company of ineptitude, laziness,
disingenuousness and bumbling racism.
Control Premium
Certainly, any acquirer has to pay what’s known as a
control premium to take over a rival. As recently as April 7,
before Teva’s approach, Mylan was trading at $59.57 -- meaning
Teva’s opening offer was already 38 percent higher.
Mylan’s two valuations come from either side of the
Atlantic. The letter to Teva was sent from the company’s tax
headquarters in the English town of Potters Bar. The 10-K was
filed from Canonsburg, Pennsylvania -- where the company employs
actual workers and produces drugs.
Perhaps that’s another explanation for the split. The
strain of having to manage a long-distance relationship with
itself may have gotten to Mylan, causing a cognitive dissonance
whereby it’s simultaneously entertaining the ideas that, if it
totally crushes it, it should be worth $73.33 a share, and
anyone who thinks it is worth as little as $82 a share is
clinically moronic.
Its a situation that Teva will surely try to exploit.
For Related News and Information:
Mylan Board Unanimously Rejects Teva Takeover Bid as Too Low
Teva Doesn’t See Antitrust or Culture Issues With Mylan Proposal
Top Stories:TOP<GO>
To contact the reporter on this story:
Ed Hammond in New York at +1-212-617-1963 or
ehammond12@bloomberg.net
To contact the editors responsible for this story:
Mohammed Hadi at +1-212-617-2914 or
mhadi1@bloomberg.net
Elizabeth Wollman