Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) issued a new open letter on Monday, signed by both the Teva Chairman Yitzhak Peterburgand and Teva’s CEO Erez Vigodman, addressed to Robert Coury the Executive Chairman of Mylan NV (Nasdaq: MYL).
They are pushing Mylan to take Teva’s $40 billion take-over bid offer seriously. They also claim he has been misleading his stockholders and is depriving them of the opportunity to consider Teva’s bid. The new Teva letter is in reply to a sharply worded letter from Coury last week. Mylan is a generic drug Manufacturer registered in the Netherlands, with its operating headquarters in the UK and listed in New York on Nasdaq.
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In their letter, Teva CEO Erez Vigodman and Chairman Yitzhak Peterburg repeat their offer for the company, and claim also that a combination would add value to both companies.
“We wholeheartedly agree with you that Mylan’s stockholders deserve a fair and fully-informed opportunity to weigh the Teva proposal, which offers a substantial premium, immediate cash value and significant upside potential in a financially and commercially stronger company, as compared to the proposed Perrigo transaction.’, they wrote, “Contrary to your claim that we are doing little more than ‘meddling’, our proposal is strong and serious, offers exceptional opportunity for Mylan’s and Teva’s stockholders and other stakeholders and deserves careful review and engagement by your board and your stockholders. The picture that you have been creating is a desperate attempt to prevent this from happening.”
Since Mylan itself has made a takeover offer for Perrigo (PRGO), Vigodman and Peterburg say, “You are asking your stockholders to vote on the Perrigo transaction with a lack of transparency, depriving them of a fair and honest financial analysis of the Teva proposal as compared to the proposed Perrigo transaction. At the same time, you continue to make confounding statements about wanting to be acquired by Novartis or Pfizer.”
The two executives refer to what they consider to be derogatory remarks made by Coury about Teva’s corporate governance in his first reaction to Teva’s offer: “You have repeatedly said that the Mylan board is able and willing to use Mylan’s unprecedented governance structure to prevent a serious buyer from succeeding in a transaction. These statements are both inconsistent with Dutch corporate governance standards and misleading to Mylan’s stockholders. Your comments are merely aimed at frustrating Teva and denying your stockholders the ability to consider the Teva proposal.” In general, Vigodman and Peterburg complain that “You have continually made grossly incorrect statements about Teva to mislead your stockholders and other stakeholders about us.”
Vigodman and Peterburg also respond to suggestions made by Coury, and by Mylan CEO Heather Bresch, that Teva’s business is in a weak state, “The proven results from recent actions that Teva has taken demonstrate that Teva is stronger than ever, both in its generic and specialty businesses. We have significantly strengthened the fundamentals of our company, solidified our key franchises, put in place robust engines for growth and provided a clear roadmap to further reinforce our industry-leading position. Your repeated statements regarding Teva’s prospects are wholly inaccurate.”
“In the last two decades”, the letter continues, “Teva has transformed the generics space, setting the industry standards for others to follow. In doing that, it generated returns for our stockholders in excess of 1600%, one of the highest rates in the pharmaceutical industry. This performance has been achieved through both organic growth and large global and diverse acquisitions that required successful integration of cultures, activities, businesses and assets in numerous territories.”
As for allegations that Teva is in breach of US antitrust laws in the way it has built up a stake in Mylan, Vigodman and Peterburg claim: “Teva’s acquisition of Mylan shares is in compliance with applicable law. We have conferred with the US antitrust authorities and have been given no reason to believe that our purchases violate the Hart-Scott-Rodino Act or any other US antitrust laws. In the meantime, we note that you have been saying you are a Dutch company when you believe it helps you create unprecedented governance structures, a UK company when it helps you lower your US taxes and a US company when you believe it helps you prevent Teva from purchasing Mylan shares.”
Teva’s offer is serious and they repeat their previous statements: “There is nothing unclear or equivocal about Teva’s intentions. We have a clear roadmap to deliver on our proposal, and we remain committed to taking all of the steps necessary to deliver the exceptional benefits of this combination to the stockholders of Mylan and Teva, as well as the other stakeholders of both companies.”