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[AMSTERDAM] An independent Dutch foundation linked to generic drugs manufacturer Mylan used a poison pill to try and block a US$40 billion takeover bid by Israeli rival Teva, citing potential job losses.
Stichting Preferred Shares Mylan said on Thursday it had exercised a call option allowing it to buy 50 per cent of Mylan's total issued and outstanding capital, giving it temporary control of half the company.
The foundation - which can exercise the call option to safeguard the company's "stakeholder interests" - said a Teva takeover would likely lead to redundancies at Mylan and reduce access to cheap generic medicines in emerging markets. "Mylan follows a strategy of using financial leverage and retained profits to fuel further growth, whereas Teva has implemented a strategy of regular dividend payouts, a focus on cost control and product portfolio rationalisation," it said.
Teva said in a statement it had the power to challenge the foundation's action in court, and that it would "take the necessary actions at the appropriate time". Previous legal moves against Dutch preference share foundations - designed to block unsolicited takeover attempts - have had mixed success.
Mylan has been rebuffing Teva's takeover bids, including one in April for $40 billion. Meanwhile, Mylan has pressed on with a US$34 billion hostile bid for Perrigo Co Plc.
Teva, which has acquired a 4.6 per cent stake in Mylan, also wants to use its stake to oppose Mylan's bid for Perrigo.
The foundation said on Thursday it would vote "to create a level playing field" in the Perrigo takeover battle.
In a note, analysts at RBC questioned the foundation's rationale for blocking the bid and said they believed Teva's bid for Mylan was more likely to succeed than Mylan's for Perrigo.
Mylan, whose management is based in the United States, moved its domicile to the Netherlands last year to help reduce the company's US tax liability.
Independent foundations - common in the Netherlands - are typically endowed with a call option allowing them to temporarily issue enough shares to take control of a company to block unwelcome bids.
Earlier this year, a judge overruled an attempt by marine engineer Boskalis to dismantle its rival Fugro's anti-takeover protections, while a foundation helped Dutch telecoms firm KPN fend off a bid by Carlos Slim's America Movil two years ago.
Shares in Mylan fell almost 2 per cent to US$66.56 on the New York Stock Exchange on Thursday, while Teva closed down 1.03 per cent in Tel Aviv.