Mylan’s recent reincorporation in the Netherlands was part of the generic drugmaker’s strategy to reduce its global tax bill. But the shift, accomplished while keeping its operational headquarters in Cecil, came with another benefit: a European-style poison pill that could help Mylan thwart a hostile, $43 billion takeover bid from Israeli drugmaker Teva Pharmaceutical Industries.
Last month, Mylan disclosed an agreement with a foundation that can indefinitely transfer voting control of Mylan’s stock from shareholders to the foundation. The agreement is triggered by an event that threatens Mylan, such as an unsolicited bid from Teva. The agreement, filed with U.S. securities regulators April 3, grants an option that allows the foundation to buy enough Mylan preferred stock to block an unwanted overture.
While Mylan shareholders may find Teva’s $82 per share offer attractive, given that Mylan closed Friday at $73.89, the foundation has the ability to block their efforts to tender their shares to Teva or to oust Mylan’s directors and replace them with candidates who support accepting the offer.
Hostile bids can be protracted affairs, said Howard Berkower, a partner with McCarter & English in New York City.
“Unless this gets friendly pretty quickly,” he said, “it could go on for months, even longer.”