What: Shares of the specialty and generic drugmaker Mylan (MYL) fell by more than 14% today on heavy volume after Teva Pharmaceutical Industries Ltd. (TEVA 1.09%) dropped its $40 billion hostile takeover bid. Instead, Teva has decided to pursue Allergan's generic drug business in a similarly sized deal.
So what: Prior to today's downward move, Mylan's shares were up by roughly 14% since Teva first expressed interest in a merger last April:
So the drugmaker's shares are basically giving back these gains following today's news.
Now what: Mylan was never interested in being acquired by Teva, at least not at the price Teva was offering. The drugmaker was thus making a push to acquire the Irish biopharma Perrigo, in a deal that was expected to come in around $33 billion, as a means to rebuff Teva.
Immediately after the news of the Teva-Allergan agreement hit the Street, however, Mylan's management reaffirmed their interest in a merger with Perrigo. Such a deal would create some compelling valuation scenarios for Mylan over the long-term, making it an issue worth keeping tabs on moving forward.
Nevertheless, there's no guarantee that Mylan's pursuit of Perrigo will be successful, meaning that investors probably shouldn't put much weight on it from a valuation standpoint at this juncture. After all, Teva was doggedly pursuing Mylan for months, and ultimately, nothing came of that effort.
