Mylan rejects Teva's US$40b offer

[NEW YORK] Mylan NV's board unanimously rejected a US$40.1 billion takeover offer from Teva Pharmaceutical Industries Ltd, saying it's too low and doesn't address the difficulties of combining companies with different cultures.

The board won't consider talks to sell the company unless it gets an offer of significantly more than US$100 a share, Mylan said in a statement on Monday. Teva offered US$82 a share in cash and stock for Mylan in a proposal last week.

"The Mylan board concluded the approach did not meet any of the key criteria that would cause the Mylan board to depart from the company's successful and longstanding standalone strategy, and consider engaging in discussions to sell," Mylan said.

Mylan is instead pursuing a separate hostile US$31.2 billion bid for fellow drugmaker Perrigo Co, saying the transaction would be more complementary in terms of products and regional assets.

In a letter included in Mylan's statement, Chairman Robert Coury described a meeting with Teva Chief Executive Officer Erez Vigodman in New York last Friday. Mr Coury said the two discussed "Teva's many struggles throughout the last several years," including generic competition, turnover in upper management and the search for new sources of growth.

Mylan would only consider a takeover if the acquirer assumed all the regulatory risk, Mr Coury said. Combining with Teva "would create significant antitrust concerns," since both are big producers of generic drugs, he said.

"For the sake of your current and future shareholders, employees, patients, customers, communities and other stakeholders, I do hope you find a way to eventually change Teva's culture and establish credibility in your business dealings," Mr Coury told Mr Vigodman in the letter. "However, we do not wish to make Teva's problems Mylan's problems." The love triangle developing between Teva, Mylan and Perrigo is adding to what has already been a record period for mergers and acquisitions in the pharmaceutical industry. Generic-drug makers announced or completed more than US$100 billion in deals last year, five times more than any year since 2005. Actavis Plc agreed to buy Botox maker Allergan Inc. for US $65 billion in the biggest deal last year.

BLOOMBERG