Mylan and Teva trade blows as Perrigo backs away

Teva and Mylan are continuing to press their takeover bids in an increasingly hostile M&A chain, while Perrigo remains staunch in its defence.

Ireland-based Perrigo has just rejected Mylan's third offer – raised to $75 in cash and 2.3 shares in Mylan for each Perrigo share – claiming that, once again, it significantly undervalues the company and is actually lower than Mylan's $205 starting bid in April.

Mylan meanwhile has left no doubt about its reluctance to merge with Teva, with chairman Robert Coury sending a scathing letter to the Israeli company's chief executive Erez Vigodman that aimed a number of blows at its financial track record, 'strategic confusion' and credibility.

Coury said there was no cultural or strategic fit between the two companies and joining forces would give a 'short-term financial pop and longer-term value erosion', contending that it made so little sense that it was probably a competitive move aimed at disrupting Mylan's business.

Vigodman responded yesterday with a rebuke of what it described as 'mudslinging' by Netherlands-domiciled Mylan, saying Teva remained committed to its $82-per-share offer for Mylan that it claimed valued the company at around $43 billion.

Mylan's criticisms of its business carried little weight, he claimed, pointing to the revitalisation in its business with cost-savings of $1 billion in hand, a predicted $4.5 billion in additional sales from already launched products and another $800 million expected from its recent acquisition of Auspex by 2019.

The main point of contention between Mylan and Perrigo is that the two companies have very different ideas about the value of the Dutch company's shares.

Mylan is basing its valuation on the share price on 7 April – just before it opened bidding for Perrigo – while the latter thinks it is more sensible to base it on the price in early-March, before speculators started accumulating the stock on rumours of Teva's interest.

The difference adds up to nearly $10 per Mylan share, so clearly has a major impact on the value of the share component of the Dutch company's offer, and Perrigo insists the last two formal offers both come in below its initial $205 proposal.

Both Mylan and Teva remain determined to complete their respective deals. For Teva, the merger would create a top 10 pharmaceutical company and help it offset the impact of generic competition to cash cow Copaxone (glatiramer acetate), its blockbuster multiple sclerosis drug that is facing that threat.

Similarly, Mylan sees Perrigo as the key to retaining its identity as an independent generics and speciality pharma company, whilst also adding in a new business unit in over-the-counter (OTC) medicines.