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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