Teva Pharmaceutical could make a public bid for Mylan as soon as Tuesday, in what could be the drug industry’s largest takeover attempt this year.

Teva Pharmaceutical Industries-Logo

According to the latest reports, Teva proposes to acquire Mylan for $82.00 per share in cash and stock.

Teva’s buy could create a generic powerhouse

Based on a Bloomberg report, Israel-based Teva Pharmaceutical is preparing an unsolicited offer for rival Mylan NV, which has a market value of $33.3 billion. People with knowledge of the matter said besides Barclays, Teva has contacted other banks about financing a deal.

According to data compiled by Bloomberg, an all-stock offer valuing Mylan at $90 a share, representing a 30% premium to yesterday’s price, would deliver annual earnings of about $5.60 a share next year. This projection is based on an estimate by Ken Cacciatore, an analyst at Cowen Group Inc., that a combination would create $2 billion in synergies. However, the earnings gain would be even larger, if Teva could partially fund the transaction with cash or debt.

Taking the unusual step of publicly rebuking Teva’s offer in advance, Mylan said in a statement Friday that it’s not interested in a sale and doesn’t expect a potential combination to clear antitrust hurdles.

Mylan’s chairman Robert Coury said in a statement: “We have studied the potential combination of Mylan and Teva for some time and we believe it is clear that such a combination is without sound industrial logic or cultural fit. Further, there would be significant overlap in the companies’ businesses and we believe that it is unlikely that any such combination could obtain anti-trust regulatory clearances.”

Drug companies in takeover spree

The pharma sector saw an unprecedented $273 billion of deals last year as drug companies are in the midst of a takeover spree.  As reported by ValueWalk, Pfizer abandoned its takeover bid for AstraZeneca, which could have resulted in the biggest drug maker in the world.

Valeant Pharmaceuticals International also tried and failed to acquire Allergan last year.

It is felt Mylan’s unsolicited bid for Perrigo could be a trigger for Teva to act before Mylan becomes even larger. Moreover, the Israeli company had been losing market share in recent years to low-cost manufacturers such as Sun Pharmaceutical Industries Ltd. Teva is also looking for new products as a key drug faces generic competition, and acquiring Mylan would help it trim costs. The firm’s multiple sclerosis treatment Copaxone will face generic rivals this year, including possibly one produced by Mylan.

Mylan shares spiked in pre-market trading following the reports of an unsolicited offer for Mylan. Shares were up 8.8% at $74 in premarket Nasdaq trade, while Teva’s New York Stock Exchange-listed shares rose 2.9% to $65.12.