Mylan Surges On Teva's $40 Bln. Offer

(RTTNews) - Israeli generic drug maker Teva Pharmaceutical Industries (TEVA) on Tuesday offered to buy smaller Dutch rival Mylan N.V. (MYL) for $82 per share in cash and stock, or about $40 billion, in a bid to further tighten its grip in the global generic space.

Teva's unsolicited offer is a near 21 percent premium to Mylan's closing price on Monday and a 48.3 percent premium to the price as on March 10, the last trading day before reports emerged of a possible merger between the two companies.

Mylan shares were gaining about 9 percent in morning trade on the Nasdaq.

Nonetheless, Teva said the deal is conditional to Mylan backing away from its $29 billion proposed acquisition of Irish drug maker Perrigo (PRGO). Perrigo shares were down 2 percent at $193.55 on the New York Stock Exchange.

The Teva offer has the backing of its board and a transaction could be completed by the end of this year.

"As one company, we would have the infrastructure and capabilities to faster pursue a differentiated business model, fully integrating specialty and generic drugs with products, devices, services and technologies," said Teva CEO Erez Vigodman in a statement.

The combined Teva and Mylan would mean 2014 proforma revenues of about $30 billion.

Mylan would be accretive to Teva earnings in the first year, and a deal could generate annual savings of $2 billion, the company said.

Teva said the combined company would leverage its advanced infrastructure and research capabilities, with enhanced scale, commercialization capabilities and geographic reach.

The company said the deal is in the best interests of shareholders and that it would present long-term growth profile and significant non-GAAP EPS growth.

Last week, Mylan said a merger with Teva would possibly not get antitrust approval. However, Teva said it is confident of clearing regulatory hurdles by ensuring that a transaction would not contain material impediments to closing.

Teva has been focused on entrenching its dominant position in the generic space. In March, the company agreed to buy Auspex Pharmaceuticals, which is developing central nervous system disorder treatments, for $3.2 billion. Teva derives a chunk of its revenues from generic drugs, and also makes treatments for respiratory illnesses and OTC drugs.

Mylan, with about 25,000 employees, had $929.4 million in net income and $7.7 billion in revenue in 2014. Last year, Mylan agreed to buy the non-U.S. operations of Abbott Laboratories for $5.3 billion in order to shift its tax base to the Netherlands.

The pharmaceuticals industry has seen a slew of mergers, with Actavis plc (ACT) in March completing the acquisition of Allergan Inc (AGN) in a cash and equity deal valued at about $70.5 billion.

TEVA is trading at $64.61, up $1.32 or 2.09%, on a volume of 14.6 million shares on the NYSE.

MYL is trading at $74.11, up $6.07 or 8.92%, on a volume of about 27 million shares on the Nasdaq.