Is Mylan Stada's third suitor? One analyst thinks it may be

mylan
A Stada buy could help Mylan further its ambitions in Europe. (Mylan)

Late last week, German generics maker Stada announced it has a third suitor in the mix to buy the company—and Bernstein analyst Ronny Gal thinks he may know who it is.

“Is Mylan Stada’s third bidder?” he asked in a Tuesday note to clients, laying out the signs that point to “yes.” Mylan looks to expand its European footprint and aims for a $6 earnings-per-share target this year—both of which a Stada buyout could certainly aid.

Mylan can carry $5 billion in added debt, meaning it could swallow a €58-per-share—or $3.72 billion—transaction, Gal pointed out.

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“We can't see a major reason why Mylan is not the third bidder,” he wrote. 

This is not the first time Stada’s name has come up as a potential Mylan target. Industry watchers floated the pairing back in 2014 after Sweden’s Meda, now part of Mylan, spurned its future buyer.

It does not mean the market will be too keen on the prospect of a Mylan-Stada match, however. Its initial response “will likely be negative on high leverage and high price,” Gal wrote, noting that Stada’s EBITDA hovered around €280 million over the last 12 months.

Luckily for wary investors, Stada has a pair of private equity firms ready to talk takeover, too.  Last week, it said it was fielding buyout interest from London’s Cinven and Boston’s Advent International.

Each of the two "could offer in different ways attractive opportunities in the interest of the company," Stada said in a statement, noting that it would strike up “open-minded talks” to "allow the interested parties to explain their strategic concepts and evaluate further value-enhancing potential with regards to the potential offer price."

Still, Stada said Thursday that it is too early to tell whether one or more of the three potential bidders will come through with a formal offer.

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