Close

Cowen Has Increased Conviction in Potential Teva (TEVA), Mylan (MYL) Transaction

May 11, 2015 3:10 PM EDT
Get Alerts TEVA Hot Sheet
Price: $14.11 -2.22%

Rating Summary:
    12 Buy, 25 Hold, 1 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 0 | Down: 0 | New: 0
Join SI Premium – FREE

Cowen's Ken Cacciatore said in a research note that he would be adding to both Teva Pharma (NYSE: TEVA) and Mylan (NASDAQ: MYL) shares aggressively, as concerns surrounding Mylan's defenses are overstated.

Comments by the analyst follow a recent volley of management statements and rumors related to a potential multi-billion dollar merger. Despite concerns about the contentious language and talk related to Mylan's takeover defenses, Cacciatore thinks the Mylan transaction will eventually proceed in a fairly normal course.

According to the most recent rumor, Mylan's Chairman Robert Coury is more willing to consider a deal with Teva after the Perrigo (NYSE: PRGO) transaction is completed, as long as Mylan is the buyer.

"If Mylan would contemplate acquiring Teva it would seem as if their own internal counsel indicates that it is a possibility, and clearly would not have FTC issues, which is the position that Teva and other independent industry contacts have maintained. And we are confused that if the stakeholders are an issue (4) would not be negatively affected by a Mylan acquisition of Teva, we can see no conceivable reason why they would be negatively affected in a Teva acquisition of Mylan. It would seem the only stakeholders negatively affected in the Teva transaction would be Mylan management, not any of the other listed stakeholders by the Foundation," stated the analyst.

“Given these comments it would now appear that issue (3), regulatory risk, and issue (4), other stakeholders, have been rendered irrelevant/inoperable with Mylan’s own commentary," Cacciatore continued.

"As for issue (1), valuation, which Mylan indicates is 'significantly in excess of $100 per share' and uses language and terms that would suggest they are seeking at least 25x EBITDA which would equate to roughly $120 per share or $60B. We would note for perspective that Allergan's final agreed upon price was $66B, which should help place Mylan's valuation line of thinking into its appropriate, unrealistic context. The bottom-line is that we continue to believe that MYL shareholders have a very realistic view of their assets, which is likely closer to $88-92 than $120," added the analyst.

For an analyst ratings summary and ratings history on Teva Pharma click here. For more ratings news on Teva Pharma click here.

Shares of Teva Pharma closed at $60.58 yesterday.



Serious News for Serious Traders! Try StreetInsider.com Premium Free!

You May Also Be Interested In





Related Categories

Analyst Comments, Hot Comments, Rumors, Trader Talk

Related Entities

Cowen & Co, Definitive Agreement