The Perfect Storm: Will The Mess At Teva Lead To A Merger?

In light of the tumult at Teva Pharmaceuticals, there is chatter the drugmaker could become an acquisition target. Certainly, there are barriers to give bidders pause – the sizeable price that would have to be paid, management turmoil and the likelihood that the Israeli government would object. Just the same, the stock is seen as an underperformer and one analyst calls this a “perfect storm.” “In a low-interest rate environment, Teva is now sitting in a very attractive position for an acquirer,” writes Sanford Bernstein analyst Ronny Gal in an investor note. “It does not have a ceo, cost cut plans are in place and value can be readily realized through a merger… We would argue that the longer Teva stock continues to underperform, the more likely it is an offer would materialize.” Indeed, Teva stock has been something of a dog for the past three years and, until Jeremy Levin resigned unexpectedly as ceo late last month, he was seen as taking enough of the right steps to turn the drugmaker around. Levin arrived in early 2012 from Bristol-Myers Squibb (BMY) and began plans to broaden the brand-name product portfolio, increase global reach and lower costs (see this). But the effort unraveled over the past few weeks amid clashes with the board, notably chairman Philip Frost, who publicly denied any rift, despite Israeli news reports that directors were meddling in day-to-day managerial affairs and balked at specifics of a $2 billion cost-cutting program. Levin, by t...
Source: Pharmalot - Category: Pharma Commentators Authors: Source Type: blogs