Reiterates Commitment to Engaging with Mylan
Board and Consummating Transaction
Teva Pharmaceutical Industries Ltd. (NYSE and TASE: TEVA) today
announced that it has sent a letter to Robert J. Coury, Executive
Chairman of the Board of Directors of Mylan N.V. (NASDAQ: MYL). The
full text of the letter reads as follows:
April 29, 2015
Robert J. Coury Robert J.
Coury Executive Chairman c/o Mylan Inc. Mylan N.V. Robert J. Coury
Global Center Albany Gate, Darkes Lane 1000 Mylan Blvd. Potters
Bar, Herts Canonsburg, PA 15317 EN6 1AG, United Kingdom
Dear Robert:
Given the constructive tenor of our meeting
last Friday and subsequent dialogue, it was disappointing that your
letter of April 27 adopted such a vastly divergent tone. Your
letter paints a fundamentally distorted picture of Teva and ignores
its rich heritage, unique culture, industry-leading achievements
and contributions that have benefited patients and healthcare
systems worldwide, while for years creating substantial long-term
value for our stockholders.
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 $82.00 per share
implies a total equity value for Mylan of approximately $43
billion. This provides your stockholders with a 48.3% premium to
the unaffected Mylan stock price of $55.31 on March 10, 2015, after
which there was widespread speculation of a transaction between
Teva and Mylan. This same view of your unaffected price, and the
implied premium in our offer, was publicly shared repeatedly by
Perrigo, a company with an independent, and highly relevant,
perspective on Mylan’s value. Moreover, we note your willingness to
cede substantial ownership of Mylan's equity to Perrigo
stockholders at a substantial discount to our premium offer, let
alone to your stated minimum price for engaging with us. Your
increased offer for Perrigo today takes away even more economic
value from your stockholders in attempting to pursue a transaction
that is already challenged, financially and otherwise.
Based on market prices, Wall Street research
estimates, and a wide range of accepted valuation methodologies,
our $82.00 per share offer represents extremely attractive,
immediate value for Mylan stockholders. Rather than being “value
and growth destructive” as you suggest, the consensus is that the
combination of our companies will allow the Mylan and Teva
stockholders to share in the profound value creation arising from
the significant synergies and strategic fit inherent in this
transaction.
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 Perrigo offer. To this end, Teva filed for premerger
notification under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976 on April 22, 2015, and has likewise started the
pre-notification process with the European Commission.
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 the United States and brought this
model to other markets, significantly benefiting patients and
healthcare systems worldwide. We continue to be at the forefront of
industry evolution having created a unique business model and
culture combining robust generics and specialty capabilities. We
have set the industry standards for others to follow. Leadership,
innovation, entrepreneurship and modest conduct are in our DNA. We
will continue to leverage them to further shape the industry in the
future. This has translated into a total stockholder return (TSR)1
of over 1,600% over the last two decades, which is well in excess
of three times that of the S&P 500 Index and underscores Teva’s
history of long-term value creation.
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
India. For decades, this has included a substantial presence in the
Netherlands, where our European and specialty business headquarters
are based, with almost 1,000 employees in management, R&D and
production positions. We are proud of our heritage as a global
company with historical roots in Israel.
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 $2
billion annually and are expected to be largely achieved by the
third anniversary of the closing of the transaction. In addition,
the combination will position the combined company to be a world
leader in positively impacting the patients and communities we
serve by providing many more people around the world with
affordable and more accessible treatments.
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 Board, Professor Yitzhak
Peterburg, the Teva Board of Directors has been significantly
transformed, adding experienced industry participants as truly
independent directors, and enhancing the diversity, global
perspective and breadth of experience of its membership. The Teva
Board brings to the table a shared commitment to our company, our
strategy and our stockholders, and a highly collaborative working
relationship with the management team.
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 $1.0 billion in incremental net revenues, and we expect
even stronger results in 2015.
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 $4.5 billion in incremental annual risk-adjusted
revenues from new specialty product launches (excluding COPAXONE®)
that have successfully started in 2014 and are on track in 2015 and
onwards. We recently augmented our pipeline with the 2014
acquisition of Labrys which we believe will position Teva as the
leader in addressing the vast unmet need for chronic and episodic
migraine medicines, with therapies expected to reach patients
starting in 2019. In March 2015, we also announced an agreement to
acquire Auspex, which is expected to further enhance Teva’s
revenues by up to $800 million in 2019, strengthening our core
central nervous system franchise with the addition of a portfolio
of innovative treatments for movement disorders. We continue to
manage the lifecycle of our COPAXONE® franchise, including the
successful launch in the U.S. of COPAXONE® 40mg which has already
achieved a 67% conversion rate, clearly highlighting the patient
need and demand for this improved product offering, and successful
and further upcoming launches in various EU countries and
elsewhere.
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
$600 million in net cost reductions in 2014 and we are on track to
generate $500 million and $250 million in net cost reductions in
2015 and 2016, respectively, for a total of over $1.35 billion in
recurring net cost reductions.
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 January 8,
2014, when my appointment as CEO was announced following which we
began executing our current strategy, Teva’s TSR was 53%,
significantly outperforming the S&P 500 Index’s 18% and S&P
500 – Pharmaceuticals Index’s 29% returns during that period.
Pathway forward
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 for Perrigo
before your Board of Directors even responded to the Teva proposal
and the tone of your letter to me with the proper exercise of
fiduciary responsibilities under any legal or business
framework.
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.
Sincerely, /s/ Erez
Vigodman Erez Vigodman President & CEO
As previously announced on April 21, 2015, Teva has proposed to
acquire Mylan for $82.00 per share, with the consideration to be
comprised of approximately 50 percent cash and 50 percent stock.
Teva’s proposal for Mylan implies a total equity value of
approximately $43 billion.
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 Perrigo or any
alternative transactions.
Barclays and Greenhill & Co. are serving as financial
advisors to Teva. Kirkland & Ellis LLP and Tulchinsky Stern
Marciano Cohen Levitski & Co are serving as legal counsel to
Teva, with De Brauw Blackstone Westbroek and Loyens & Loeff
N.V. acting as legal advisors in the Netherlands.
About Teva
Teva Pharmaceutical Industries Ltd. (NYSE and TASE: TEVA) is a
leading global pharmaceutical company that delivers high-quality,
patient-centric healthcare solutions to millions of patients every
day. Headquartered in Israel, Teva is the world’s largest generic
medicines producer, leveraging its portfolio of more than 1,000
molecules to produce a wide range of generic products in nearly
every therapeutic area. In specialty medicines, Teva has a
world-leading position in innovative treatments for disorders of
the central nervous system, including pain, as well as a strong
portfolio of respiratory products. Teva integrates its generics and
specialty capabilities in its global research and development
division to create new ways of addressing unmet patient needs by
combining drug development capabilities with devices, services and
technologies. Teva’s net revenues in 2014 amounted to $20.3
billion. For more information, visit www.tevapharm.com.
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 December 31, 2014 and in our other filings with the U.S.
Securities and Exchange Commission (the “SEC”), and those relating
to Mylan’s business, as detailed from time to time in Mylan’s
filings with the SEC, which factors are incorporated herein by
reference. Forward-looking statements are generally identified by
the words “expects,” “anticipates,” “believes,” “intends,”
“estimates,” “will,” “would,” “could,” “should,” “may,” “plans” and
similar expressions. All statements, other than statements of
historical fact, are statements that could be deemed to be
forward-looking statements, including statements about the proposed
acquisition of Mylan, the financing of the proposed transaction,
the expected future performance (including expected results of
operations and financial guidance), and the combined company’s
future financial condition, operating results, strategy and plans.
Important factors that could cause actual results, performance or
achievements to differ materially from the forward-looking
statements we make in this communication include, but are not
limited to: the ultimate outcome of any possible transaction
between Teva and Mylan, including the possibility that no
transaction between Teva and Mylan will be effected or that a
transaction will be pursued on different terms and conditions; the
effects of the business combination of Teva and Mylan, including
the combined company’s future financial condition, operating
results, strategy and plans; uncertainties as to the timing of the
transaction; the possibility that the expected benefits of the
transaction and the integration of our operations with Mylan’s
operations (including any expected synergies) will not be fully
realized by us or may take longer to realize than expected; adverse
effects on the market price of Teva’s or Mylan’s shares, including
negative effects of this communication or the consummation of the
possible transaction; the ability to obtain regulatory approvals on
the terms proposed or expected and satisfy other conditions to the
offer, including any necessary stockholder approval, in each case,
on a timely basis; our and Mylan’s ability to comply with all
covenants in our or its current or future indentures and credit
facilities, any violation of which, if not cured in a timely
manner, could trigger a default of other obligations under cross
default provisions; our and Mylan’s exposure to currency
fluctuations and restrictions as well as credit risks; the effects
of reforms in healthcare regulation and pharmaceutical pricing and
reimbursement; uncertainties surrounding the legislative and
regulatory pathways for the registration and approval of
biotechnology-based medicines; the impact of competition from other
market participants; adverse effects of political or economic
instability, corruption, major hostilities or acts of terrorism on
our or Mylan’s significant worldwide operations; other risks,
uncertainties and other factors detailed in our Annual Report on
Form 20-F for the year ended December 31, 2014 and in our other
filings with the SEC; and the risks and uncertainties and other
factors detailed in Mylan’s reports and documents filed with the
SEC. All forward-looking statements attributable to us or any
person acting on our behalf are expressly qualified in their
entirety by this cautionary statement. Readers are cautioned not to
place undue reliance on any of these forward-looking statements.
Forward-looking statements speak only as of the date on which they
are made and we assume no obligation to update or revise any
forward-looking statement, whether as a result of new information,
future events or otherwise.
ADDITIONAL INFORMATION
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 SEC. This communication is
not a substitute for any proxy statement, registration statement,
prospectus or other document Teva and/or Mylan have filed or may
file with the SEC in connection with the proposed transaction. No
offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the U.S.
Securities Act of 1933, as amended. INVESTORS AND SECURITY HOLDERS
ARE URGED TO READ THE PROXY STATEMENT(s), REGISTRATION STATEMENT,
PROSPECTUS AND OTHER DOCUMENTS THAT MAY BE FILED WITH THE SEC
CAREFULLY IN THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE AS
THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED
TRANSACTION. Any definitive proxy statement(s) (if and when
available) will be mailed to stockholders. Investors and security
holders may obtain free copies of this communication, any proxy
statement, registration statement, prospectus and other documents
(in each case, if and when available) filed with the SEC by Teva
through the web site maintained by the SEC at
http://www.sec.gov.
1 All TSR data from Factset; dividends received are assumed to
be reinvested
ContactsInvestorsUnited
StatesKevin C. Mannix215-591-8912Ran Meir215-591-3033orD.F. King
& Co., Inc.Jordan Kovler / Tom Germinario212-
269-5550orIsraelTomer Amitai972 (3)
926-7656orMediaTeva United StatesDenise
Bradley215-591-8974orUnited StatesJoele Frank, Wilkinson Brimmer
KatcherJoele Frank / Tim Lynch / Meaghan Repko212-355-4449orTeva
IsraelIris Beck Codner972 (3) 926-7687orThe NetherlandsCitigate
First FinancialUneke Dekkers / Petra Jager / Suzanne Bakker+ 31 20
575 40 10
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