http://www.options-trading-education.com/24213/calls-or-puts-on-teva/
Calls or Puts on Teva
According to Forbes the Teva-Mylan merger mania is about profit margins.
Every man, woman and child in the U.S. will eventually take a pill manufactured by the new entity if Teva is successful in its pursuit of Mylan.
Given the Hart-Scott-Rodino Act, the Federal Trade Commission (FTC) will certainly require divestiture of assets in any generic combination. This will most certainly allow for a top down restructuring to the winners of this merger gambit retaining the highest margin products and divisions while divesting lower margin legacy products.
For the time being the issue for options traders is whether to buy calls or puts on Teva.
Will Teva Acquire Mylan?
How much will Mylan want to allow a takeover by Teva? How will regulators approach the merger of the two largest generic drug manufacturers in the world? According to Reuters, Mylan shareholders want a deal.
Some of the top investors at Mylan NV, including Paulson & Co, are encouraging its board of directors to consider a takeover proposal from rival Teva Pharmaceutical Industries Inc, according to people familiar with the matter.
A handful of these investors have expressed their support in recent weeks for the creation of the world’s largest generic drug maker by sales, these people said, declining to be named because they were not authorized to speak to the media.
Teva unveiled an unsolicited $40 billion takeover proposal on Tuesday for the Canonsburg, Pennsylvania-based company.
Having insiders on your side bodes well for a successful takeover. A Teva takeover of Mylan could mean that buying calls now could be profitable. But what will be the mix be in the end and will it be profitable?
Not According to Mylan Management
Bloomberg Business reports on the Teva offer.
“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,” Robert J. Coury, Mylan’s executive chairman, said last week.
Denise Bradley, a spokeswoman for Teva, and a representative for Barclays declined to comment. Nina Devlin, a spokeswoman for Mylan, didn’t immediately respond to an e-mail seeking comment outside regular business hours.
“We would hope that like Mylan did last week, Teva will take the opportunity to clear the air this week on its current thinking since Teva now finds itself in a position of being spurned by Mylan for a deal Teva has not even formally proposed,” David Maris, an analyst at BMO Capital Markets in New York, said in a note yesterday.
On one hand resistance from Mylan may scuttle any deal. On the other hand it may only serve to drive the price up.
What about Mylan?
Mylan has been trying to take over the generic drug company Perrigo and has been refused. Now it is the subject of a potentially hostile takeover by Teva.
4. http://www.options-trading-education.com/24213/calls-or-puts-on-teva/
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Before We Continue…
23. http://www.options-trading-education.com/24213/calls-or-puts-on-teva/
“We would hope that like Mylan did
last week, Teva will take the
opportunity to clear the air this week
on its current thinking since Teva now
finds itself in a position of being
spurned by Mylan for a deal Teva has
not even formally proposed,” David
Maris, an analyst at BMO Capital
Markets in New York, said in a note
yesterday.
