Teva Pharmaceutical Industries Ltd. has announced a proposal to acquire all of the outstanding shares of Mylan N.V. in a transaction valued at $82.00 per Mylan share, in a stock-and-cash deal valued at approximately $40 billion and that would create a combined company with 2014 pro forma sales of approximately $30 billion. The non-binding proposal by Teva follows Mylan’s proposal made earlier this month to acquire Perrigo for $28.9 billion, Teva’s proposal to acquire Mylan is conditioned on Mylan not acquiring Perrigo or pursuing another transaction. 

“Our proposal is compelling for both Teva and Mylan stockholders and other stakeholders,” said Erez Vigodman, president and chief executive officer of Teva., in a company statement.”Our proposal would provide Teva stockholders with very attractive strategic and financial benefits and Mylan stockholders with a substantial premium and immediate value for their shares, as well as the opportunity to participate in the significant upside potential of the combined company, one that would transform the global generics space and leverage it to hold a unique leadership position in the pharmaceutical industry. We have long respected Mylan's business, and we are confident that Mylan's board of directors and stockholders will agree that our proposal represents a significantly more attractive alternative for Mylan and its stockholders than Mylan's proposed acquisition of Perrigo.”

Teva's proposal would provide Mylan stockholders with consideration representing a 37.7% premium to the stock price of Mylan on April 7, 2015, which is the last day of trading prior to Mylan's press release regarding its unsolicited proposal for Perrigo, and a 48.3% premium to the unaffected stock price of Mylan on March 10, 2015, which is the last day of trading prior to widespread speculation of a transaction between Teva and Mylan, according to information from Teva. 

The non-binding proposal by Teva to acquire Mylan is conditioned on Mylan not pursuing its acquisition of Perrigo or alternative transaction.In a letter to Mylan Executive Chairman Robert Coury, Teva’s Vigodman said: “We were disappointed that you prematurely addressed a potential combination in your press release issued on April 17, 2015 [the date in which Mylan announced a proposal to acquire Perrigo]. We would welcome the opportunity to meet with you to address your points and to elaborate on the rationale of our proposed combination, its appealing economics, and the benefits it provides for our respective stakeholders,” Vigodman further said in his letter. “We are prepared to begin working with you immediately and to commit the resources and time required to complete the transaction expeditiously.” Teva’s board of directors has approved the proposal and a deal to acquire Mylan would not require Teva shareholder approval or a financing condition.

A combined Teva and Mylan would create a leading specialty and generic drug company with combined pro forma 2014 revenues of approximately $30 billion. The companies’ combined specialty pharmaceutical business would be approximately $10 billion with a therapeutic focus in multiple sclerosis (MS), respiratory, pain, migraine, movement disorders, and allergy therapeutics. The deal, if completed, would come as Teva faces generic competition for its top-selling drug, Copaxone, a drug to treat MS, which had 2014 revenues of $4.3 billion. The US Orange Book patents covering Copaxone (20 mg) expired in May 2014. To combat generic-drug incursion for Copaxone (glatiramer acetate), Teva developed a new formulation, Copaxone 40 mg/mL, which is administered three times a week. The new formulation, which was approved by the US Food and Drug Administration (FDA) in January 2014, allows for a less frequent dosing regimen administered subcutaneously for patients with relapsing forms of MS. Earlier this month, Sandoz, the generics business of Novartis, became the first company to receive FDA approval for a generic glatiramer acetate in a 20-mg/1-mL daily injection.

On the generics side, a combined company Teva and Mylan would have a combined pipeline of more than 400 pending abbreviated new drug applications and more than 80 first-to-files in the US, according to information from Teva. Teva noted that the acquisition of Mylan would provide Teva with capabilities and technologies to focus on more complex, hard-to-produce durable products. With the acquisition, Teva would gain Mylan's ophthalmic products, soft gel caps, topical and inhalant technologies, “Wave 2” biosimilars, injectables and alternative dosage forms, and antiretroviral products.

Teva anticipates that a combined company could achieve cost synergies and tax savings of approximately $2 billion annually. The cost saving are expected to be largely achieved by the third year following the closing of the transaction. Teva expects the savings to come from operational, selling, general, and administrative (SG&A) expenses, manufacturing, and R&D efficiencies as well as tax savings.

The proposal is subject to customary conditions and Teva said that it has “carefully studied the regulatory aspects of a combination of Teva and Mylan, in conjunction with its advisors. Teva is confident that it would be able to structure a transaction that would not contain material impediments to closing and that it can determine and promptly implement divestitures, as necessary, to gain regulatory clearances” said the company in its statement. Teva expects that the proposed transaction, if it proceeds, can be completed by year-end 2015, but there is no assurance that a transaction between Teva and Mylan will be consummated.

Mylan issued a statement on April 17, 2015 amid media speculation that Teva would make a proposal to acquire Mylan. Mylan Executive Chairman Robert J. Coury commented: “Mylan is fully committed to its stand-alone strategy, including its proposal to acquire Perrigo, and today’s speculation has no impact whatsoever on this strategy. We have studied the potential combination of Mylan and Teva for some time,and we believe it is clear that such a combination is without sound industrial logic or cultural fit. Further, there would be significant overlap in the companies’ businesses, and we believe that it is unlikely that any such combination could obtain antitrust regulatory clearances. Of course, should any party make an actual offer to acquire Mylan, the Board would carefully consider it in exercising its fiduciary duties in the best interests of the company, our stockholders, and other stakeholders.”

Source: Teva Pharmaceutical Industries and Mylan