Undeterred by Perrigo rejection, Mylan tells Teva to step off

Mylan Chairman Robert Coury

On Friday, Mylan ($MYL) all but rejected Teva's ($TEVA) takeover bid with its own sweetened bid for Ireland's Perrigo ($PRGO). But now, it's made the snub official, delivering a resounding "no" to its generics rival.

Monday, Mylan's board unanimously dismissed Teva's $40 billion offer, and it wasn't shy about sharing its reasoning. The Israeli drugmaker's proposal "grossly undervalues" Mylan, it argued. And Mylan's not interested in any proposal that involves shareholders swapping out their Mylan shares for Teva shares it deems "low-quality."

Sure, Mylan's open to any bids that come its way, Chairman Robert Coury said in a statement. As he disclosed in a public letter to Teva CEO Erez Vigodman, he even met up with the Teva chief last week in New York to discuss a potential deal--something that should have happened before Teva took its interest public, he noted. But "that does not mean we will entertain offers that grossly undervalue the company and leave our shareholders and other stakeholders exposed to serious risk," he said.

Teva CEO Erez Vigodman

Coury's issues with the proposal don't end with its financial structure. Where Teva sees a combined company that could reshape the generics industry and move the field forward, Mylan sees a consolidation of supply and manufacturing full of red flags for antitrust regulators. Because of the companies' overlap, joining hands wouldn't ultimately help Teva broaden its geographic reach, diversify its portfolio or expand its capabilities, Coury contends. Instead, all the company will get out of a deal is "short-term financial pop and longer-term value erosion."

And as Coury said earlier this month, he notes "different and conflicting cultures" between the two companies, and Teva's proposed tie-up doesn't address the "serious challenges" they could pose to integration. That problem could grow even larger under a Teva leadership team with a "poor record of delivering sustainable shareholder value," he figures.

In fact, Coury said, the whole thing makes so little sense that Mylan believes it's nothing more than a move by Teva to distract its rival and throw it off course from its business plan--which includes snapping up Perrigo.

There's just one problem for Mylan, and that's that Perrigo has shown no interest in becoming part of that plan. Friday, the target turned Mylan down for a second time--just hours after receiving its beefed-up $31 billion-plus bid.

That new offer wasn't really beefed up at all, the way Perrigo sees it. Mylan's proposal put forth a price that was actually lower than the $205 per share it vetoed earlier this month, Perrigo contended Friday. That's because the offer includes a substantial portion of Mylan shares.

"Based on Mylan's unaffected [stock] price of $55.31 per share on March 10, 2015, the last day of trading prior to widespread public speculation that Teva was considering an offer for Mylan, the value of the [new] offer is $181.67 per Perrigo share," it said.

- read Mylan's release
- see Friday's story on Perrigo

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