Updated from 2:02 p.m. EST
Investor Carl Icahn said in a filing that he is willing to buy
for $20 a share, sending the stock up 10% in midday trading.
Icahn, who controls 9.8% of Mylan's stock and is its biggest shareholder, lambasted the company's efforts to acquire
, saying such a purchase would be an "egregious mistake."
"We are not persuaded that there is no growth potential in the generic drug industry, and we believe that there are much better alternatives for Mylan than the acquisition of King," Icahn said in a form 14 filed with the
Securities and Exchange Commission
Mylan confirmed that it had received a letter from Icahn. "This letter appears to be a standard Icahn tactic, containing factual misrepresentations, and is notable in its lack of detail and commitment," the company said in a statement. "In addition, with regard to Mr. Icahn's threats against members of Mylan's board of directors, we can assure him that his attempts at corporate intimidation will not succeed."
Mylan added it would respond in "due course" and that its position remains unchanged.
Mylan shares shot up on the news, recently climbing $1.81, or 10.5%, to $18.97. King fell 12 cents, or 1.1%, to $11.08.
Icahn said he was willing to enter an acquisition contract without a breakup fee in order to let Mylan continue negotiating with other suitors.
"In this regard, we have had informal discussions that lead us to believe that at least three synergistic buyers would also have an interest in acquiring Mylan on -- but only on -- a friendly basis," the filing said. "To our knowledge, Mylan has not previously shown any indication to competitors that it would be willing to entertain 'friendly' bids and offer due diligence."
Icahn said he would stand by the $20 offer until Mylan shareholders reject the King deal and would be willing not to wage a proxy fight for control of the company during the next two years.
Icahn began buying Mylan shares on July 26, the day Mylan announced its merger agreement with King. Under terms of the transaction, 0.9 Mylan shares would be swapped for each King share, a deal worth $4 billion at the time.
Icahn has repeatedly criticized the King-Mylan proposal as dilutive to Mylan shareholders and too expensive.
Less than three weeks ago, Icahn said he had hired a consulting firm, A.T. Kearney, to evaluate the generic-drug industry, Mylan and King. In what now appears to be something of a hint of things to come, Icahn said the evaluation "will show there are many avenues" that "make more strategic sense" for Mylan than acquiring King.
Icahn is not alone in his criticism of the proposed deal. In early October, UBS Global Asset Management wrote to Mylan saying it does "not believe that the proposed acquisition ... is in the best interests of our clients," according to a document filed with the Securities and Exchange Commission. UBS owned 10.5 million shares, or 3.9%, of Mylan's stock as of June, according to the latest available data.
Mylan's merger plan comes amid no small amount of uncertainty at King. Earlier this week, the company said it will need more time to file its third-quarter 10-K statement, for which it already had sought a five-day postponement from the SEC. Last month, King said it had experienced a "high level of returns" due to a new inventory management system, a situation that has prompted King to warn investors that it might have to restate earnings. If King restates earnings, it would be a technical violation of the merger agreement with Mylan.
In addition, both the SEC and the Department of Health and Human Services are investigating King's past underpayments involving Medicaid and other governmental health programs, poor record-keeping and inadequate internal controls.
King also has undergone a fair amount of management turnover this year, including the resignation of its CEO Jefferson J. Gregory.
Recently, there's been growing speculation that Mylan might itself become a takeover target, if it failed in its pursuit of King. Both
of Israel and the Sandoz generic unit of
of Switzerland have been mentioned as possible suitors.
Icahn, himself, is no stranger to the M&A game, having engineered a takeover of the legendary airline TWA more than a decade ago.