Mylan to list on TASE if Perrigo bid succeeds

Joseph Papa
Joseph Papa

Mylan has confirmed it will dual list on the TASE and Nasdaq if it acquires Perrigo.

One of the main worries of Tel Aviv Stock Exchange (TASE) leaders recently has been the expected delisting of Perrigo Company (NYSE:PRGO; TASE:PRGO), if and when the company's acquisition by Mylan Pharmaceuticals is completed. Perrigo has been listed on the TASE for a decade (since it acquired Israeli company Agis), and it constitutes a considerable part of the Tel Aviv 25 index, in addition to being listed on the New York Stock Exchange. With a $27.6 billion market cap, Perrigo accounts for 9.8% of the index, putting it in third place behind Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) and Bank Leumi (TASE: LUMI). The acquisition of the company and the delisting of its share are liable to significantly shrink trading volumes on the TASE, which in any case has been rather moribund in recent years.

It looks like the TASE heads can breathe a sigh of relief, however: sources inform "Globes" that the heads of Mylan declared in recent days that the company was committed to continuing the dual listing of Perrigo's share even after the Perrigo deal is completed. This means that if Mylan does succeed in taking over Perrigo, the Mylan share will be listed for trading on the TASE in its place parallel to being traded on Nasdaq. Mylan confirmed the report.

Mylan, with a $34.9 billion market cap, is trying to take over Perrigo in a deal amounting to over $33 billion, but the Perrigo board of directors opposes the deal. At the same time, Israeli company Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) is trying to take over Mylan in a deal amounting to over $40 billion, a deal opposed by the Mylan board of directors. To some extent, a Mylan-Perrigo deal constitutes protection against a takeover of Mylan by Teva, because Teva has announced that if Mylan acquires Perrigo, it will abandon the acquisition of Mylan.

Mylan got a shot in the arm two days ago, when Abbot Laboratories, its largest shareholder (14.5%), announced its support for the Perrigo deal and Mylan's continued existence as an independent company. Mylan's shareholders meeting for approving the acquisition of Perrigo is scheduled for middle or end of the third quarter. Mylan needs an ordinary majority, and with support from Abbot, its chances of winning approval have improved.

Even after Abbot's declaration, Teva made it clear that it was still committed to the Mylan deal. As part of its attempted takeover of Mylan, Teva has begun in recent weeks to buy Mylan shares on the open market, on which it has already spent $1.5 billion. As of now, Teva already owns 4.3% of Mylan's share capital. If it reaches 4.6%, Teva have a position of influence in a legal proceeding likely to ensue in the Netherlands (Mylan is registered as a Dutch company).

If Teva eventually manage take over Mylan, its share purchases will help it reduce the cost of the acquisition, because the purchases are being made at the market price, which is lower than Teva's offer of $82 a share. On the other hand, if the deal does not go through, Teva will be left with a large stake in a competing company, and possible also a loss resulting from a drop in the shares' value. Teva's most recent report was about share purchases made two days ago - in other words, on the same day that began with Abbot's announcement of support for Mylan.

A source very familiar with the situation told "Globes" in this context that it appears that as of now, Teva has no way, legally or regulatory, to complete a takeover of Mylan, which raises questions about the shares it is buying.

"Abbot's announcement was the final blow for Teva, and Teva's shareholders should be very worried about the billions being spent on the quixotic share purchases - throwing good money after bad," the source said. "It's possible that Teva didn't take all the data into account before embarking on this aggressive strategy."

Mylan asserts that Teva's share purchases violate US antitrust law. It cannot be ruled out that Mylan will challenge this policy in court. Teva, on the other hand, says that its measure is legal.

Another dispute between Teva and Milan concerns the regulatory attitude towards completion of the deal. Teva believes that obtaining approval from the antitrust authorities will not be an obstacle to completing the deal, while Mylan holds that the antitrust authorities will not approval a merger of this type.

Published by Globes [online], Israel business news - - on June 18, 2015

© Copyright of Globes Publisher Itonut (1983) Ltd. 2015

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