Mylan Board unanimously rejects unsolicited expression of interest from Teva

April 28, 2015 12:32 PM

Mylan N.V. yesterday announced that its Board of Directors has unanimously rejected the unsolicited expression of interest from Teva Pharmaceutical Industries, Ltd. to acquire Mylan, which was announced by Teva on April 21, 2015.

After a comprehensive review conducted in consultation with its financial and legal advisors, 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 the Company.

Mylan Executive Chairman Robert J. Coury commented, “Our Board has a very important fiduciary obligation to protect the best interests of the Company’s shareholders and other stakeholders, and has always been open to considering all paths forward in that regard, and this situation is no different. However, that does not mean we will entertain offers that grossly undervalue the company, and leave our shareholders and other stakeholders exposed to serious risk.

“After thorough consideration, Mylan’s Board unanimously determined that Teva’s proposal grossly undervalues Mylan, and would require Mylan’s shareholders to accept what we believe are low-quality Teva shares in exchange for their high-quality Mylan shares in a transaction that lacks industrial logic and carries significant global antitrust risk.  In addition, we also believe that the proposal does not address the serious challenges of integrating two fundamentally different and conflicting cultures under a Teva Board and leadership team with a poor record of delivering sustainable shareholder value. We believe that these challenges would make it very difficult to generate value from this combination for Mylan shareholders.

“Furthermore, the proposal contains nothing meaningful indicating why a combination with Teva would be in the best interest of Mylan’s employees, patients, customers, communities and other stakeholders.  In summary, the Board determined that Teva’s expression of interest is not in the best interests of Mylan, its shareholders or other stakeholders, and we believe that this is only a mere attempt by Teva to frustrate and distract Mylan from its business plan and strategy.”

In addition to the official rejection, Mylan CEO Coury had some criticisms for Teva management in a publicly-disclosed letter to Teva’s CEO Erez Vigodman.

“I was very disappointed by your decision to make your interest in Mylan public without first taking the time to speak to me or meet in person. As those who know me will attest, I always am willing to discuss opportunities to create value for Mylan’s shareholders and other stakeholders, and although it was after-the-fact, I was happy to grant you the opportunity to meet with me in person to hear your rationale outlined in your letter,” said Coury to Vigodman.

“During our meeting (last Friday), we touched on Teva’s many struggles throughout the last several years, including the approval of the first generic version of your flagship product Copaxone (despite Teva’s claims that an AB-rated generic would never be approved); the persistent turnover and turmoil amongst the Teva leadership and Board and the resulting strategic confusion; Teva’s consistent underperformance in comparison to the market and our industry; and your increasing need to find new sources of future growth. As I am sure you are aware, Mylan’s historical compound annual growth rates (CAGR) in terms of revenues and adjusted EBITDA from 2011-2014 are more than double Teva’s,” he continued.

Coury continued, saying, “Through your leadership, you had the opportunity to set the right tone, and show the world that there is a new Teva. Instead, you chose to approach Mylan in a way that demonstrates that the old Teva is very much still alive, which only continues to beg questions about Teva’s credibility.”

Coury added, “It is important to note that given the massive overlap between our companies, the synergizing of redundant or similar efforts and products will inherently have a major negative impact on the very growth prospects you are aiming to extract from Mylan. What will be left is a short-term financial pop and longer-term value erosion.”

Source: Mylan

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