Israeli pharmaceutical giant Teva offered to buy Mylan in a cash-and-stock deal valued at about $40.1 billion.
The potential combination would result in a powerhouse of a generic drug developer competing against rivals such as Sun Pharma. According to Bloomberg, the Pennsylvania-based Mylan “says it makes about one of every 11 drugs prescribed to Americans.”
Teva Pharmaceutical Industries Ltd., an Israeli company headquartered in Petah Tikva, has grown to become the world’s largest producer of generic medications.
It offered to pay $82 per share for Mylan, a 21 percent premium to the latter’s closing price of $68.05 on Monday, and a 48.3% premium on the price on May 10, “which is the last day of trading prior to widespread speculation of a transaction between Teva and Mylan,” as Teva CEO Erez Vigodman noted in a Tuesday letter to Mylan’s Executive Chairman Robert Coury.
According to the Wall Street Journal, the proposed deal would create “the world’s biggest generic drug company by sales. Teva estimated a deal could generate an estimated $2 billion annually in cost and tax savings.”
Earlier this month, Mylan NV offered to buy generic drug and ingredients maker Perrigo for about $28.9 billion, apparently in an effort to head off Teva’s bid. Mylan released a statement last week saying management was firmly opposed to Teva’s proposal and expressing doubts that regulators would approve such a deal.
But Teva said Tuesday that its proposal is more attractive for Mylan shareholders. “The combined company would have an enhanced financial profile, creating the opportunity for rapid deleveraging and the funding of future growth,” Vigodman wrote in his letter to Coury.
The transaction would offer Mylan stockholders “a meaningful upfront premium, significant and immediate cash consideration and liquidity,” among other benefits.
Vigodman also rejected Mylan’s concerns about regulators preventing the deal. “We and our advisors have carefully studied the regulatory aspects of a combination of Teva and Mylan, and we are confident that we would be able to structure a transaction that would not contain material impediments to closing and that divestitures as necessary to gain regulatory clearances can be determined and implemented promptly,” he wrote.
Teva’s offer is contingent on Mylan not completing the proposed Perrigo deal, the company said.