Published On: Sun, Apr 12th, 2015

Mylan Vs. TEVA: Will Generic Drug Giants’ Buying War Boost or Wound the TASE?

The Perrigo stock weight in the TA-25 (derivatives) is 9.8%, second only to TEVA (10.5%).

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Israel’s stock market is expected to reach its sharpest increase since January 2013, based on last weeks’s news that drugmaker Mylan NV has offered to buy Perrigo Co., Bloomberg reported. Already, the TA-25 Index has climbed 2.1 percent in Tel Aviv Sunday morning, to a record high of $422.02.

Perrigo, with biggest weighting on the Tel Aviv index, rose a dizzying 21 percent to an all-time high of $196.76.

Mylan NV offered to buy Perrigo for $28.9 billion, or $205 a share in cash and stock, an offer which is about 25 percent over Perrigo’s closing price in the U.S. on April 7—which then rose 18 percent on April 8 closing at $198.55 on April 10.

The Tel-Aviv Stock Exchange was closed April 9, for the last day of Passover.

“Today’s rally is all about the Perrigo buyout offer, ” Saar Golan, a trader at Bank of Jerusalem Ltd. in Tel Aviv, told Bloomberg by e-mail. “Mylan’s $205 bid is likely not the end of the story as rival bids may appear and Mylan may need to improve its bid.”

Over on the eastern shore of the Mediterranean pond, The Marker has been warning of unintended consequences, the dire kind:

The Perrigo stock weight in the TA-25 (derivatives) is 9.8%, second only to TEVA (10.5%).

With its acquisition by Mylan, the TASE will say good bye to the stock that attracted the sixth largest trading volume on the market.

Perrigo joined the Tel Avive Stock Exchange in 2005, following its acquisition by Mori Arkin’s Agis company. Its removal following the Mylan buy would constitute be biggest blow to the TASE, which has watched 149 companies in five years move on to foreign exchanges—roughly a quarter of the companies that traded in Tel Aviv in Q4/2009.

The Marker speculates that Mylan’s proposal to purchase Perrigo prevented, or at least postponed, an even bigger drama: s TEVA tender offer for all of Mylan’s shares.

Analysts say the Mylan proposal to acquire full ownership of Perrigo last week was a step taken in haste and out of fear that Mylan was getting close to being acquired by TEVA.

Bloomberg confirmed that before Mylan announced its designs for Perrigo, it had been considered a likely target for acquisition by TEVA, and so, after Mylan’s offer it remains to be seen whether TEVA would still be seeking to pick up either company, or go look elsewhere.

Israeli analysts expect the TEVA-Mylan drama to continue to influence the TASE well into the summer.

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