board of directors Monday once again rejected investor Carl Icahn's takeover offer while also questioning his intentions and said it planned to go ahead with its planned acquisition of
Icahn, who controls 9.8% of Mylan's stock and is its biggest shareholder, has offered $20 a share for the drugmaker and lambasted its efforts to acquire King, calling it an "egregious mistake."
In a statement Monday, the drugmaker responded at length to a letter Icahn send the company's board: "Mylan's Board of Directors has evaluated the letter sent to it by Carl Icahn. Mr. Icahn has a long history of self-serving actions, and we believe that his letter is just another self-serving publicity device, aimed at trying to intimidate our management and our board with inflammatory and inaccurate statements. These tactics will not succeed, and we urge shareholders not to rely on Mr. Icahn's statements as factual. We do not believe that Mr. Icahn's letter by any means constitutes a serious offer for the company, and our Board has determined that discussions with Mr. Icahn are not in the best interests of Mylan."
Mylan shares rose 4 cents to $18.92 in premarket trading, after jumping some 10% Friday. King closed at $11.15 Friday.
In a recent filing with the
Securities and Exchange Commission
, Icahn said, "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."
Mylan's board Monday said it is "committed to maintaining the company's independence" and emphasized that its "position with respect to the King acquisition remains unchanged."
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 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.