Generics vs. Brands: Is Mylan Takeover Bait? (MYL, PFE)
Mylan, Inc. (NYSE: MYL) is trading up today on some hope that an analyst research report that puts the company down as possible takeover bait. The report comes from Caris & Co., and the possible interested buyer is said to be Pfizer Inc. (NYSE: PFE). This may sound odd, but Pfizer has made actions toward generic growth expressed how there is more and more interest in generic drugs.
In the report, Caris called Pfizer a one of a kind asset. We wanted to see what got this here to this level, and Mylan took some steps two years ago which leveraged the company at the same time that the sector came under further pressure. In 2007, Mylan acquired a 71.5% stake in Matrix Laboratories in India for its Active Pharmaceutical Ingredients supplier operations for over $700 million. It also in the same year took on a rather large debt load to help fund its multi-billion dollar buyout of Germany’s Merck KGaA generic-drug business.
Before Mylan went on the buying spree, its stock was north of $20.00. It slid thereafter and its 52-week trading range is $5.75 to $14.94. Caris believes Mylan could fetch close to $20.00 per share. It is not fair to look in the rear-view mirror, but had Pfizer jumped on this in late 2008 it might have been able to opportunistically paid significantly less.
Mylan shares are up almost 5% at $13.90 today.
Jon C. Ogg
June 11, 2009
