By Ed Silverman
Mylan NV Executive Chairman Robert Coury on Monday issued a
stinging rebuke of Teva Pharmaceutical Industries Ltd.'s
unsolicited bid, using terms harsh even for the sharp-elbowed world
of deal making to explain why the generic-drug maker's board
rejected the $40 billion deal.
In a 3,216-word letter, Mr. Coury questioned the credibility of
Erez Vigodman, Teva's chief executive; repeatedly chided Teva for a
"dysfunctional culture;" and disparaged what he called a "poorly
performing, troubled company" that has displayed "consistent
underperformance."
"Teva has faced a constantly changing and flip-flopping
strategy, rotating leadership, shareholder outrage and a flat to
negative growth outlook," Mr. Coury wrote. He added that the
combination "lacks industrial logic and is a terrible cultural
fit."
In a statement issued in response to the rejection, Teva
reiterated its rationale for the bid, but didn't address any of the
criticisms leveled by Mr. Coury. Teva maintains a combination would
make a strategic fit and could operate more efficiently, with an
estimated $2 billion in annual cost and tax savings.
A Teva spokeswoman said the drug maker wouldn't have any further
comment.
Calling Mylan "a great company," Mr. Coury derided the notion
that Mylan stockholders should accept what he termed "low-quality
and high-risk" Teva shares.
It is "implausible" that Teva can satisfy Mylan's board, he
wrote, adding that any discussion of a sale would have to start at
a price "significantly in excess of $100 per share." Teva has
offered $82 a share for Mylan.
Mr. Coury's remarks come after people familiar with the matter
last week said that Teva stock is frequently referred to as "toilet
paper" inside Mylan.
The missive underscores the bitter rivalry between the two
companies, which have been jockeying for supremacy among
generic-drug makers, while simultaneously trying to expand into
brand-name medicines and establish global operations.
Sanford C. Bernstein analyst Ronny Gal said that he didn't
expect "as venomous a response as this has been."
"If Mylan believes it can offer its shareholders a better value
than Teva's offer, I think it has some explaining to do," he
said.
A Teva takeover of Mylan would create the world's top-selling
generic-drug company with more than $30 billion in sales in 145
countries.
In 4 p.m. trading, shares of Mylan fell 5.7% to $71.72, while
Teva was down 4.3% to $61.63.
Known for being plain-spoken, Mr. Coury pointedly expressed
disappointment that Mr. Vigodman publicly declared interest in a
deal before privately approaching him. And he suggested the move
reflected the sort of management turmoil that led to Mr. Vigodman
becoming Teva chief in early 2014 after being a Teva board member
for several years.
"Since 2007, your board has churned through three different
chief executive officers," Mr. Coury wrote, noting that while Mr.
Vigodman is "fairly new" to the CEO position, he was on the board
during "turbulent" times at Teva.
Mr. Coury contrasted Mr. Vigodman's approach with Mylan's own
hostile bid for Perrigo Co. earlier this month, which he described
as being based on "a long history of mutual respect." After private
discussions, "I personally informed [CEO Joe Papa] in advance of
making the proposal public."
On Friday, Mylan raised its offer for Perrigo to $33 billion,
from $28.9 billion, which was promptly rejected; Mylan stood by its
offer. A Perrigo representative didn't immediately respond to a
request for comment.
Write to Ed Silverman at Ed.Silverman@wsj.com
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