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Teva proposes to acquire Mylan for $82 per share in cash and stock

Wednesday, April 22, 2015

Teva Pharmaceutical Industries has proposed to acquire all of the outstanding shares of Mylan in a transaction valued at $82 per Mylan share, with the consideration to be comprised of approximately 50% cash and 50% stock. The Teva cash and stock proposal provides Mylan stockholders with a substantial premium and immediate cash value, as well as significant potential for future value creation through participation in a financially and commercially stronger company.

Teva’s proposal also provides Mylan stockholders with a more attractive alternative to Mylan’s proposed acquisition of Perrigo, as announced on April 8, as well as to Mylan on a standalone basis. Teva’s proposal would provide Mylan stockholders with consideration representing a 37.7% premium to the stock price of Mylan on April 7, which is the last day of trading prior to Mylan’s press release regarding its unsolicited proposal for Perrigo, and a 48.3% premium to the unaffected stock price of Mylan on March 10, which is the last day of trading prior to widespread speculation of a transaction between Teva and Mylan.

The combined company would leverage its significantly more efficient and advanced infrastructure, with enhanced scale, production network, end-to-end product portfolio, commercialization capabilities and geographic reach. With this platform, the combined company would focus on complex technologies and more durable and sustainable products, in combination with robust capabilities in specialty drug development and commercialization. As a result, the combined company would have a unique and differentiated business model addressing significant trends and discontinuities prevailing among patients and healthcare systems around the world.

The combined company also would have an enhanced financial profile, creating the opportunity for rapid deleveraging and the funding of future growth—in generics, specialty and the intersection of the two.

Erez Vigodman, president and CEO of Teva, said, “Our proposal would provide Teva stockholders with very attractive strategic and financial benefits and Mylan stockholders with a substantial premium and immediate value for their shares, as well as the opportunity to participate in the significant upside potential of the combined company—one that would transform the global generics space and leverage it to hold a unique leadership position in the pharmaceutical industry. We have long respected Mylan’s business, and we are confident that Mylan’s board of directors and stockholders will agree that our proposal represents a significantly more attractive alternative for Mylan and its stockholders than Mylan’s proposed acquisition of Perrigo.”

Prof. Yitzhak Peterburg, chairman of the Teva board of directors, said, “The proposal to acquire Mylan was unanimously approved and strongly supported by the Teva board. Teva’s strategy has been to aggressively pursue growth opportunities that advance our goal of being a stronger, more diversified organization with the scale and resources to drive value across our business. Our proposed combination advances these objectives and would result in significant and sustained value creation for Teva stockholders.”

Strategic rationale includes:

  • The transaction would create a company with a significantly expanded and more efficient global footprint, including leadership positions and strengthened operations, sales and R&D platforms in markets around the world.
  • The Teva and Mylan product offerings are highly complementary, and would create the broadest portfolio in the industry, with a combined pipeline of over 400 pending ANDAs and over 80 first-to-files in the U.S.
  • Teva is committed to investing in and growing the combined company’s $10 billion specialty pharmaceuticals business, which it expects will grow stronger, based on combining the separate companies’ standalone offerings. The combined company would benefit from leading positions in multiple sclerosis, respiratory, pain, migraine, movement disorders and allergy therapeutics, combined with an enhanced global infrastructure to pursue current and future commercialization.
  • The combined company would have an enhanced financial profile, creating the opportunity for the funding of future growth. The combined Teva and Mylan would have pro forma 2014 revenues of approximately $30 billion and pro forma 2014 EBITDA of approximately $9 billion.
  • In 2016, the combined company is expected to have cash flow from operations, excluding one-time restructuring costs, of greater than $6 billion, revenues of greater than $30 billion and EBITDA of greater than $10 billion. In 2018, the combined company is expected to have cash flow from operations of greater than $8.5 billion, revenues of approximately $33 billion and EBITDA of approximately $13 billion.
  • The combined company is expected to have substantial debt capacity and an investment grade rating. Furthermore, the combined company’s strong cash flow generation will allow deleveraging to at or below three times gross debt to EBITDA after 24 months, and lower on a net debt to EBITDA basis. As a result, the combined company will be strongly positioned from day one to pursue future acquisitions to expand its portfolio in both specialty pharmaceuticals and generics, in line with Teva’s stated strategy to grow through value-enhancing and complementary acquisitions.

The proposal was unanimously approved by the board of directors of Teva.

This proposal is subject to customary conditions. 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.

Teva expects that the proposed transaction can be completed by year-end 2015. Teva notes that there can be no assurance that a transaction between Teva and Mylan will be consummated.

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