Who Is the Winner From The Mylan-Perrigo Merger? Citigroup Says… Teva Pharmaceuticals

In a report published Wednesday, Citigroup analyst Liav Abraham commented on a Mylan NV MYL and Perrigo Company plc PRGO combination, noting that a bid from Teva Pharmaceutical Industries Ltd TEVA is still possible, but challenging. According to Abraham, if Teva is interested in acquiring Mylan, a bid would need to be made in the near-term. A Teva-Mylan combination would generate "material" earnings per share accretion for Teva and would likely be well received by the Street. However, Teva would need to engage in a hostile bid process for the company – made even more complicated by Mylan's recently implemented poison pill. Abraham continued that Teva's strategy of acquiring smaller branded and generic companies will result in a long-term value creation opportunity and provide greater portfolio diversification and a more attractive longer term growth profile. Finally, the analyst suggested that a potential Teva combination with Actavis plc's ACT generics business is preferred over an outright acquisition of Mylan. In fact, the prospect of a potential Mylan sale could entice Actavis to speed up a divestiture of its generics business which isn't considered to be a core strategic asset. Shares of Teva remain Buy rated with an unchanged $70 price target.