Ten days have passed since Mylan Pharmaceuticals' (MYL) CFO met with investment institutions in Israel in order to persuade them that Mylan is right in its opposition to being acquired by Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA), and in its effort to acquire Perrigo Company (NYSE:PRGO; TASE:PRGO). It is now Teva's turn to meet with investment institutions, and to try to convince them of the opposite.
In a meeting with institutions today, Teva CEO Erez Vigodman said that if the Mylan shareholders meeting voted in favor of the Perrigo deal, Teva would withdraw its offer for Mylan. Teva is offering over $40 billion to take over Mylan, which opposes the offer. Mylan is trying to take over Perrigo in a $33.3 billion deal, which Perrigo is opposing.
Following the meeting, Bank of Jerusalem (TASE: JBNK) analyst Jonathan Kreizman wrote today that Teva believes it has a strong legal case against Mylan's aggressive corporate governance, and is convinced that the Netherlands court (Mylan is incorporated in the Netherlands) will disallow the clauses blocking the replacement of Mylan's chairman. Kreizman added that in addition to Myan, Teva has identified additional acquisition opportunities, but the Mylan opportunity is very significant, and Teva will therefore make every effort to see it through.
Migdal Capital Markets pharma analyst Steven Tepper was impressed by Teva's data presentation. "In the bottom line, Vigodman gave a sterling appearance. Teva came with its figures in order, and presented the rationale and logic of acquiring Mylan, in contrast to the very general things presented by Mylan." According to Tepper, even though the meeting included Teva investors, there was a nod towards Mylan's shareholders. "The deal is worthwhile for Teva shareholders, and certainly even more worthwhile for those of Mylan," Tepper wrote.
While Mylan is convinced that Teva has no way of completing the deal, Teva is taking the opposite approach. According to Tepper, "Teva has not concealed the complexity of the process. They think that they have solutions for all the obstacles, but they did not try to conceal the fact that there is a chance that the deal will not go through. My impression is that Teva has a considerable case to present to the Dutch court. It's not black and white, as Mylan is saying."
Tepper adds that the Mylan general shareholders meeting convened to approve the Perrigo acquisition (apparently in August) is a watershed. "For Teva, if there is a majority for the Perrigo acquisition, it will be a vote of no confidence in the Teva-Mylan deal. Teva could theoretically continue to fight for Mylan, but it will be hard to persuade the court." In his opinion, Teva will submit an official and improved bid before the shareholders meeting, and will work behind the scenes to convince as many major investment institutions with holdings in Mylan as possible to support its position.
A request for a class action
Last week, a court request for a class action against Teva and its board of directors was filed by minority shareholders seeking to cancel some of the decisions made in the past at the shareholders meeting and certain decisions by the board of directors, including one related to the Mylan acquisition, because of the clause allowing the transfer of shareholders' voting rights at the meeting to the board of directors.
Published by Globes [online], Israel business news - www.globes-online.com - on July 5, 2015
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