|View printer-friendly version|
|April 29, 2015 4:13 p.m.|
|Teva Sends Letter to Mylan Board|
Reiterates Commitment to Engaging with Mylan Board and Consummating Transaction
Given the constructive tenor of our meeting last Friday and subsequent
dialogue, it was disappointing that your letter of
I firmly believe that our respective stakeholders do not support, or benefit from, mudslinging, mischaracterization, rehashing of history or selective presentation of facts. Instead, I would prefer to return the dialogue to the significant value creation opportunity that a combination of Teva and Mylan represents to the stockholders and other stakeholders of both our companies. My focus has been and will remain on Teva’s deep commitment to consummating a transaction as soon as possible. To that end, we stand ready to engage with Mylan’s Board of Directors in a constructive manner while continuing to pursue antitrust approvals and building upon the very positive interactions with Mylan and Teva stockholders to date.
With that objective in mind, I would like to take the opportunity to briefly address a number of the points that were raised in your letter, and provide you with clarity on these issues so as to help avoid any further misunderstandings.
Teva’s proposal provides premium value for Mylan and its prospects
Our cash and stock offer of
Based on market prices,
Summarily rejecting our offer which provides Mylan stockholders with such a significant premium is inconsistent with the responsibilities and obligations of your Board of Directors to Mylan’s stakeholders.
Antitrust is not a barrier to completion
The characterizations of the antitrust issues in your letter
considerably overstate the regulatory hurdles for a combination of Teva
and Mylan, both in terms of scope and timing. As noted, Teva fully
expects that the regulatory reviews of a Mylan acquisition can be
completed in 2015. Further, Teva is confident it can meet the very same
seven-month timing window Mylan laid out for its
Teva has a successful track record of timely clearances in similar situations. In each of our acquisitions of IVAX, Barr and Cephalon, we quickly agreed to necessary divestitures and other remedies and were able to close in less than six months.
Further, we are confident that any potential divestitures would be manageable. Most of Mylan’s drug products do not overlap with Teva’s, and the majority of those that do overlap have a number of other competitors and should not raise antitrust issues. Teva is prepared to make the divestitures needed to secure clearances and is actively identifying both potential divestitures and potential acquirers for divested assets. More broadly, a combination of our two companies will leave over a dozen significant sellers of generic prescription drugs, in the face of a customer base that continues to consolidate and gain in power.
Additionally, there are very few products sold by both Mylan and Teva that are on the FDA’s “drug shortage” list, and where these overlaps do exist, we do not foresee meaningful regulatory issues given differences in dosage strengths and/or the number of other sellers that exist.
In summary, Teva does not see regulatory clearances as a meaningful barrier to a transaction with Mylan, and we expect that the proposed transaction can be completed by year-end 2015. We are prepared to engage with you and your advisors to discuss our solutions and provide you with any clarity that you seek on this subject.
Teva and Mylan’s obviously strong cultural and strategic fit
Your repeated references to an absence of “cultural fit” between our organizations are puzzling.
Teva has a history of over 100 years and is widely-recognized as a
leading global pioneer that literally created the generics market in
We have over 43,000 employees and operate in 100 markets, as well as
over 60 manufacturing sites around the world, including six sites and
thousands of dedicated employees in
We also have a rich history of successfully integrating large, global and diverse organizations from an operational, geographic and cultural perspective. Our leadership team is respectful of an acquired company’s heritage and is focused on preserving each organization’s core strengths, competencies and talent. We appreciate the value and importance of Mylan’s heritage and intend to preserve it. Through our extensive interactions with Mylan and its people over the years, we believe that Mylan and Teva employees fundamentally share a devotion and deep passion to improve patients’ lives by delivering to the world’s population access to the broadest range of affordable, high-quality medicines.
We are determined to capture the full potential value resulting from this transaction by having the best people from both companies working for a much stronger combined entity. Teva is meritocratic, fair and committed to identifying the best people and best assets across each company.
The strategic fit is likewise compelling. The proposed combination of Teva and Mylan is fully consistent with our clearly articulated strategy to advance both our generics and specialty pharmaceutical businesses. The proposed combination will create an industry-leading company, well positioned to transform the global generics space and create a unique and differentiated business model, leveraging on its significant assets and capabilities in generics and specialty. The transaction is not about size for size’s sake, but rather about the unparalleled strategic and financial fit of the two companies for the benefit of all stakeholders.
The two companies’ capabilities in product portfolios, complex
technologies and marketing are highly complementary. Together, we will
become more efficient, allowing us to generate significant value,
penetrate new markets and develop new capabilities. The opportunities
for substantial achievable cost synergies and tax savings are estimated
to be approximately
Proven leadership team committed to creating value for all stakeholders
Our Board of Directors and management team are fully aligned and are unanimously supportive of this transaction.
Our leadership team, beginning with our executives and extending throughout our business, operations and scientific ranks, is among the best and well-respected in the industry. It is a truly global team, highly diverse and rich in experience in generics, specialty and other relevant industries. We are an organization that is committed to cost control and restraint at all levels of our organization. This includes our approach to executive pay and perquisites, which favors restraint and a pay-for-performance philosophy, a reflection of our fidelity to the interests of all stakeholders, and not just a select few.
Teva has demonstrated recently that it is highly attentive to its
stockholders’ views on matters of business strategy and corporate
governance and has made decisive and rapid changes to the composition
and conduct of our Board of Directors. Headed by our new Chairman of the
We, like every company - including yours - have had issues and front-page “black-eyes” in the past. Our current leadership team has fully addressed these challenges and transformed Teva and it is now stronger than ever. For either of us to rehash incidents of bygone periods relating to organizations or individuals hardly does justice to our collective work improving the reputation of the generics industry and its high-quality products, nor does it advance the interests of either of our organizations as we evaluate this current and rare opportunity for future growth and value-creation as a combined company.
Teva is well-positioned to maintain its leadership, drive growth and continue superior financial performance
When I became CEO in 2014, I promised that our first order of business would be to strengthen our global leadership in generics while improving profitability, driving organic growth and delivering on the promise in our specialty pipeline. We have been successful in doing so, as was illustrated by our strong 2014 results.
Our 2014 results demonstrated strong performance in our industry-leading
generics business with significant growth in profitability and multiple
product launches delivering
In addition to our robust generics business, our specialty pipeline is
poised to deliver significant value to stockholders and patients and
diversify Teva’s future revenues. Our pipeline currently includes 20
late-stage products. In 2019, we expect to generate
Through a combination of the strong growth outlook for our generics business, our ongoing cost optimization programs and our specialty pipeline, Teva will generate significant growth offsetting the anticipated decline of certain of our mature specialty franchises.
Teva also has a strong track-record of achieving cost savings and
operational improvements. We delivered
The market has recognized these achievements, with Teva’s one and
three-year total stockholder return (TSR), comprised of share price
appreciation and our regular dividend, standing at 27% and 44%,
respectively. Notably, since
I fully agree with you that it would have been preferable to have
engaged in a private discussion to explore this transaction. However,
you left us no choice but to make our proposal public after you publicly
rejected a potential offer before it had even been made. It is hard to
reconcile that preemptive rejection, your announcement of a firm offer
We are fully committed to pursuing this transaction and we believe the best path forward is constructive, good faith dialogue between our respective teams. We encourage you to put the best interests of your stakeholders first by engaging in productive negotiations with us.
As I said when we met last Friday, we are prepared to present to your Board of Directors an overview of Teva and to address any questions your Board might have.
We certainly hope that the Mylan Board of Directors chooses to engage constructively with us as soon as possible in order to reach agreement on a combination that offers an unparalleled opportunity for value-creation and many other benefits for our respective stockholders, customers, patients and employees. This is a message we are hearing from more and more stockholders of Teva and Mylan.
As previously announced on
The transaction would not be subject to a financing condition or require
a Teva stockholder vote. Teva’s proposal is contingent on Mylan not
completing its proposed acquisition of
Safe Harbor Statement
This communication contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995, which
are based on management’s current beliefs and expectations and involve a
number of assumptions, known and unknown risks and uncertainties that
change over time and could cause future results, performance or
achievements to differ materially from the results, performance or
achievements expressed or implied by such forward-looking statements.
These assumptions, known and unknown risks and uncertainties include,
but are not limited to, those discussed in our Annual Report on Form
20-F for the year ended
This communication is for informational purposes only and does not
constitute an offer to buy or solicitation of an offer to sell any
securities. This communication relates to a proposal which Teva has made
for a business combination transaction with Mylan. In furtherance of
this proposal and subject to future developments, Teva and Mylan may
file one or more proxy statements, registration statements or other
documents with the
1 All TSR data from Factset; dividends received are assumed to be reinvested