Mylan rejects $40bn bid, questions Teva’s credibility
Earlier this month, Mylan announced it was hoping to acquire Perrigo Company for $29bn (€27bn), but just as Perrigo turned down the offer, fellow Generics Giant Teva stepped in and made an unsolicited $40bn bid for Mylan.
Mylan has rejected the bid with Executive Chairman Robert Coury claiming the offer “grossly undervalues the company” and does not address the “serious challenges” of Teva’s leadership culture,
In an open letter to Teva’s CEO Erez Vigodman, Coury slammed Teva’s $82 per share valuation, and said any negotiation would have to begin significantly in excess of $100 (approximately $53bn total) and not to include any “low-quality and high-risk currency in the form of Teva shares.”
However, he also questioned Teva’s record of business and management:
“Erez, you told me in our meeting that Teva is different now and the challenges and cultural issues you have faced previously were now in the past,” he said. “Yet, this change was not evident in the way you approached your interest in Mylan.
Coury challenged Teva’s credibility, adding Teva’s Board of Directors “refuses to change, lacks adequate global pharmaceutical experience and consistently meddles in company operations.”
He added: “Ten years of acquisitions and a flip-flopping strategy have left Teva with a smattering of assets in specialty, generics, biotech and consumer. You claim to want to ‘redefine the generics industry,’ but what faith can we have that you have any clear vision for the industry at all?”
‘Clearly in no one's best interest ‘
At the same time as rebuffing Teva, Mylan has upped its bid for Perrigo to $31bn in a n engagement Coury told Vigodman “has been based on a long history of mutual respect and prior private discussions.”
Mylan has made clear a merger with Perrrigo would be complementary, but Coury dismissed a Teva-Mylan merger as lacking “sound industrial logic for such a combination.”
“There is simply no ultimate benefit in the three core areas that we believe are essential to any transaction in our industry: geographic reach, portfolio diversification and capability expansion.”
He also added that Mylan’s large presence in India – 21 manufacturing facilities and 12,000 employees – could cause a problem for Teva’s “dysfunctional” culture, and “could disrupt the core of our business, result in the flight of key talent (in India and elsewhere), and meaningfully and adversely impact the results of the possible combination.”
In closing, Coury added: “I do hope you find a way to eventually change Teva's culture and establish credibility in your business dealings. However, we do not wish to make Teva's problems Mylan's problems, or to inflict them on Mylan's shareholders and other stakeholders. This potential combination is clearly in no one's best interest.”
