A foundation set up by pharmaceutical firm Mylan NV on Thursday
triggered a Dutch variation on a poison pill to fend off a takeover
proposal by Israeli rival Teva Pharmaceutical Industries Ltd.
The foundation, called a "stichting" in Dutch, has the option to
temporarily obtain preferred shares with special voting rights that
give it the power to thwart a hostile bid. Mylan, which has its
headquarters in Pennsylvania but is legally domiciled in the
Netherlands, created the stichting after it became a Dutch
corporation through an acquisition earlier this year.
The stichting's board said in a statement that it "has formed
its independent judgment that Mylan N.V.'s best interests and those
of its broader shareholder constituencies are at risk as a
consequence of the uncertainty and threats associated with a
possible takeover of Mylan by Teva." The board said its aim in
triggering the shares is to restore stability at Mylan so it can
concentrate on its business.
Mylan set up the stichting in April, giving it the power to
obtain a set of preferred shares that dilutes the voting power of
other shareholders in case of a challenge to the company's
independence.
The move effectively blocks Teva's efforts unless the stichting
were successfully challenged in court. Teva has built up a 4.6%
stake in Mylan in recent months, meeting the minimum requirement
necessary to challenge Mylan's management in a special Dutch court
called the Enterprise Chamber.
Teva released its own statement, calling the move "unwarranted"
and said it "risks depriving Mylan stockholders and other
stakeholders of the value inherent in a combination of Teva and
Mylan." Teva added that it is "well advised on Dutch law, including
the ability of Mylan stockholders to challenge this action in
court, and are prepared to take the necessary actions at the
appropriate time."
Mylan released a statement acknowledging the stichting's
decision.
In addition to its top-selling EpiPen emergency treatment for
allergic reactions, Mylan is most focused on selling generic
prescription drugs. Teva, which says its medicines account for one
out of every eight prescriptions in the U.S., also has a popular
branded multiple-sclerosis drug, Copaxone, but focuses primarily on
generics. Teva has argued a combination would bolster both
companies' abilities to develop low-price generic biotech drugs, a
market expected to show significant growth.
Teva in April launched a $40 billion bid for its rival. Mylan
has soundly rejected Teva's overtures, with its Chairman Robert J.
Coury saying the bid grossly undervalues the company and that
Teva's board and leadership have a "poor record of delivering
sustainable shareholder value."
Instead, Mr. Coury has been pursuing Irish generics drug maker
Perrigo Co., and is trying to convince Mylan shareholders to vote
for that deal, which Perrigo has resisted. Perrigo, which also
redomiciled—to Ireland—from the U.S. in 2013, sells
over-the-counter cough-and-cold remedies and infant formula to
chains like Wal-Mart Stores Inc. and Walgreens, which then sell the
products under their own brands.
In its statement, the stichting's board noted Teva's 4.6% stake
and said that it plans to use its preferred shares to "create a
level playing field" when Mylan shareholders vote on the Perrigo
transaction, expected sometime later this summer.
The stichting's board said that it would only retain the
preferred shares temporarily. "The stichting wants it to be known
that it doesn't intend to keep its preferred shares for any longer
than necessary to achieve the objectives in line with its
purpose."
Mylan shares were down 43 cents to $67.47. Teva shares rose 25
cents to $62.75. Perrigo shares declined 13 cents to $188.92.
Write to Shayndi Raice at shayndi.raice@wsj.com
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