Mylan share price plunges after Teva abandons bid
Shares in drugmaker Mylan plunged almost 14 per cent on Monday after Israeli group Teva Pharmaceutical abandoned its $40.1bn hostile takeover attempt and instead announced an agreed deal to buy part of Allergan.
Teva’s decision to dump its bid for Mylan in favour of Allergan ends one of the most acrimonious takeover tussles of the year and continues the frenetic pace of dealmaking in the pharmaceuticals sector.
It comes after Netherlands-incorporated Mylan, one of the world’s biggest makers of generic medicines, waged an aggressive defence including a complex “poison pill” arrangement and frequent mudslinging.
“We congratulate Teva on their agreement to acquire Allergan’s generics business. As Teva continues to move forward with their strategy, Mylan’s strategic focus remains unchanged,” Mylan said in a statement on Monday.
Mylan said it would press ahead with its own deal — an unsolicited $33bn attempt to acquire Perrigo of Ireland — which some investors had seen as a blocking tactic to repel Teva’s advances.
Mylan had been planning to fund roughly two-thirds of the Perrigo bid with its stock, however, meaning the value of its offer is much diminished following the sharp decline in its own share price on Monday.
Erez Vigodman, Teva’s chief executive, said the purchase of Allergan’s generics division for $40.5bn would provide an “even greater opportunity to create value for shareholders”.
He added that Teva had “preferred Allergan from the outset” and approached the company about a deal earlier this year. At the time, Allergan was unwilling to discuss a divestment, prompting Teva to begin its pursuit of Mylan, said Mr Vigodman.
Teva also said it was reviewing its 4.6 per cent position in Mylan, which it amassed recently to give it leverage in its takeover pursuit. It said it would come to a “clear view” on the stake in the next few weeks, and a decision to divest could put further pressure on Mylan’s shares.
Shares in Mylan were down 13.8 per cent in early trading in New York. Allergan was up 6.6 per cent and Perrigo was up 4.5 per cent.
Some Mylan investors have been privately critical over the group’s intransigence towards Teva’s offer, arguing that the company was putting its independence ahead of shareholder returns.
The shareholders are more likely to back its takeover bid for Perrigo now that the prospect of a Teva deal has faded, according to a person who has spoken to its largest investors. “A deal with Perrigo is the last thing left for them on the table,” said the person.
Robert Coury, chairman and chief executive of Mylan, is set to contact his counterpart at Perrigo this week in a final attempt to convince him to start friendly takeover talks rather than enter a full-blown hostile battle, said people familiar with the matter.
Perrigo is not opposed to being acquired, but the board is convinced that it can be bought for much more than Mylan has offered.
Brent Saunders, chief executive of Allergan, also suggested Mylan had made a tactical misstep. “Teva was offering a very nice premium for that company. I would have more seriously considered it,” he said in an interview with CNBC.
Ronny Gal, an analyst at Bernstein Research, said some investors in Mylan were now “arguing there is enough dissatisfaction to merit a shareholder revolt to change management”.
Abbott Laboratories, its largest shareholder, supports the Perrigo bid.