Israel’s Teva Pharmaceutical Industries Ltd. is making an unsolicited offer for smaller rival Mylan N.V., a move seen as a way to ease pressure on its lucrative Copaxone drug which faces increasing generic competition.
Teva, the world’s largest generic drugmaker, is proposing to pay US$40 billion for Mylan but analysts said the offer is not enough.
They said Teva would need to sweeten its bid to the US$90-per-share range.
A viable offer would be US$92, about 22 times Mylan’s expected earnings tis year, S&P Capital analyst Jeffrey Loo said.
“If they raise their bid, they will have more Mylan shareholders pressuring management to come to the table,” Loo said.
He suggested Teva would need to increase the cash component of the offer, which is now at 50 percent.
Mylan has yet to respond publicly. The company is pursuing an unsolicited, US$29 billion bid for Perrigo Co Plc., a major producer of over-the-counter medicines, in an apparent attempt to stave off interest from Teva.
Perrigo has not yet responded to that offer, saying it would consult its board, but a source familiar with the matter said the company was set to reject Mylan’s bid as soon as this week.
Mylan executive chairman Robert Coury said last week that the company had studied the potential for a deal with Teva and concluded that such a combination “is without sound industrial logic or cultural fit”, and would attract antitrust scrutiny.
Teva said its offer should be more attractive to Mylan shareholders than the proposed purchase of Perrigo, representing a 48 percent premium to the company’s share price before speculation of a deal surfaced on March 10.
Pressure has been growing on Teva for new revenue sources as multiple sclerosis drug Copaxone starts to face generic competition this year.
Teva said the purchase would help it to expand its offering of harder-to-produce medical products, such as soft-gel caps, topical and inhalant technologies and injectables, and increase its portfolio of specialty pharmaceuticals.
The acquisition would create an entity with more than US$30 billion in annual revenue, add to earnings in the first year and eventually generate US$2 billion in annual savings, Teva said.
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