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| Mylan Chairman Robert Coury |
In their last letter to Mylan ($MYL) Chairman Robert Coury, Teva's leaders made it explicitly clear: They're proceeding down their takeover path whether Mylan likes it or not. And they took another step forward this week, further hiking Teva's ($TEVA) stake in their target.
Teva now boasts a Mylan share above 3%, Bloomberg reports, making it the company's eighth largest investor. Under corporate laws in the Netherlands, where Mylan is legally based, that threshold also gives Teva the power to submit agenda items at a shareholder meeting next quarter, which could be key for its dealmaking efforts.
"Teva is showing it's willing to put chips on the table to complete this deal," Migdal Capital Markets analyst Steven Tepper told the news service. "They are likely to continue buying and to use this as leverage against Mylan's management."
If Teva does continue buying, the next critical benchmark will come at 4.6%; if Teva amasses a stake that size, it'll earn the right to initiate inquiry proceedings before the Dutch Enterprise Chamber, Bloomberg notes. And as Citigroup analyst Liav Abraham told the news service, the Israeli drugmaker will likely make a formal tender offer for its generics rival's shares at that time.
But not if Mylan has any say in the matter. The company has so far staunchly refused Teva's $40-billion-plus bid and requests to come to the bargaining table, and its execs have pledged to fight a hostile takeover with everything they've got. That includes attacking Teva's stake, which they say violates U.S. antitrust laws.
As Teva CEO Erez Vigodman and Chairman Yitzhak Peterburg pointed out in a Monday letter to Coury, though, it's perfectly legal under Dutch laws--and that's all that should matter.
"We note that you have been saying you are a Dutch company when you believe it helps you create unprecedented governance structures, a U.K. company when it helps you lower your U.S. taxes and a U.S. company when you believe it helps you prevent Teva from purchasing Mylan shares," they wrote.
Meanwhile, Mylan is still chugging along with its plan to buy Perrigo ($PRGO)--a move that would thwart Teva's pickup efforts. Perrigo, though, has so far not seemed so keen on the idea, with skipper Joseph Papa recently noted that when it comes to valuing his company, the two drugmakers are "far apart."
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