STOCKHOLM--The board of Swedish specialty pharmaceuticals company Meda AB (MEDA-A.SK) Monday rejected a sweetened merger bid from U.S. peer Mylan Inc. (MYL), saying it prefers to remain a stand-alone company, while a lack of support from its largest shareholder would scupper the deal anyway.

Earlier this month Mylan, one of the world's biggest generic drug makers by sales, approached Meda with a merger proposal but was shown short shrift. Mylan came back with an improved bid Friday, thought to be $6.7 billion, which has again been dismissed by the Swedish company.

"All contacts between Meda and Mylan have been terminated without further actions," the company said. "The Board's decision is based on a strong belief in the continued potential of Meda as a stand-alone company and the assumption that a transaction cannot be completed as it lacks sufficient support from Meda's largest shareholder."

Write to Dominic Chopping at dominic.chopping@wsj.com; Twitter: @WSJNordics

Corrections & Amplifications

This story was corrected at 0712 GMT because the bid price in the second paragraph was misstated as $6.7 million.

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