"Bloomberg" quotes Sanford C. Bernstein & Co. as saying that Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) may seek a merger with Mylan Inc. (Nasdaq: MYL) or Valeant Pharmaceuticals International Inc. (NYSE: VRX) if it cannot restore value on its own and does not find a new CEO. "Bloomberg" also quotes Matrix Asset Advisors Inc. as saying that if Teva could even become vulnerable to an activist investor.
"Bloomberg" notes that Teva, which has a market cap of $32.9 billion, has been one of this year’s worst-performing drug stocks. Mylan's market cap is $16 billion and Valeant's market cap is $35.4 billion.
"Bloomberg" says, "As peers such as Pfizer Inc. (NYSE: PFE; LSE: PFZ) and Actavis plc (NYSE: ACT) generated windfalls for shareholders with breakups and takeovers, Teva tumbled this month to its cheapest price-sales ratio… Teva hasn’t replaced the CEO who stepped down in October amid a dispute with the board, adding to uncertainty over how it will compensate for lost sales when generic rivals challenge its top-selling medicine. Analysts predict revenue this year will fall for the first time in at least two decades."
“People are looking for the company to do something,” Standard & Poor’s equity analyst Herman Saftlas told "Bloomberg". “It’s going to take more than just business as usual to right-size this ship and get it back into growth mode. Teva probably realizes now that a little more drastic steps have to be taken. It is possible that they could unveil a deal with somebody."
Teva declined to comment when asked if it was weighing a merger or acquisition.
Published by Globes [online], Israel business news - www.globes-online.com - on November 20, 2013
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