UPDATE: Defiant Teva to buy even more Mylan shares, setting up potential legal showdown
UPDATE: Reuters reports that Teva is looking to buy even more shares in Mylan as part of a possible effort to issue a legal challenge to the latter firm in Dutch court as it pursues a $40 billion takeover. Mylan has slammed Teva's previously reported 1.35% stake in the company as a violation of U.S. antitrust laws—but Teva is reportedly planning on digging in, raising its stake to 4.6%.
Teva believes that Mylan is not protected by U.S. antitrust laws limiting how much of a stake the company can own in its competitor, arguing that Mylan is actually principally run in the Netherlands. With an outsized stake, Teva could force Mylan to address its takeover bid in Dutch court.
- In a hostile takeover triangle scenario, Teva continues to pursue Mylan, which is based in the Netherlands, while Mylan is determined to pursure Ireland-based Perrigo.
- Robert Coury, CEO of Mylan, rejected Teva's $40.1 billion offer in April and is focused on purusing Perrigo.
- Teva has taken a 1.35% stake (CORRECTION: A previous version of this article misstated the size of Teva's stake) in Mylan's stock, which Mylan suggests may violate U.S. antitrust law (updated above).
This multiplayer takeover drama has been unfolding since April when Mylan made it clear it was not interested in Teva's overtures—and that $40 billion was simply insufficient as a starting point for a conversation. In typical triangle fashion, all pursuers were being spurned. Even as Mylan rejected Teva's offer, Perrigo was rejecting Mylan's $32.7 billion bid.
At stake is the ability to build a larger generics powerhouse of a company, since combining the synergies of any two of these companies would translate into tremendous generic firepower.
If Teva were to succeed in its quest to buy Mylan, Teva would end up controlling roughly 25% of the generics industry. However, Mylan does not appear to be taking the Teva bid seriously at this point. In fact, Coury sent a letter to Teva's CEO Erev Vigodman recently saying, “It is time for Teva and its board to stop playing games with our company, its business, mission and strategy and its stakeholders.”
Whether that letter is saying, "Go away and let us pursue Perrigo," or "You need to offer a lot more money," is not clear, but what is clear is that neither Mylan nor Perrigo is in the mood for a merger.