By Olivia Oran and Nadia Damouni
(Reuters) - 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.
Paulson, a New York-based hedge fund that owned roughly 14.9 million shares or 3 percent of Mylan as of Dec. 31, declined to comment. A representative for Mylan also declined to comment.
Pressure has been growing on Jerusalem-based Teva for new revenue sources. Its biggest selling drug, multiple sclerosis injectable treatment Copaxone, faces competition from oral treatments and cheaper generics in the coming years.
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Mylan, which makes the EpiPen product for severe allergies, is incorporated in the Netherlands and can take advantage of Dutch provisions that would make a hostile takeover difficult.
In response to media speculation about a potential deal, Mylan Executive Chairman Robert Coury said last week that the company had studied a transaction with Teva and concluded that such a combination "is without sound industrial logic or cultural fit," and would attract antitrust scrutiny.
Mylan is pursuing its own $29 billion unsolicited bid for over-the-counter medicines maker Perrigo Co PLC . Perrigo's board rejected that offer earlier on Tuesday.
Teva said acquisition of Mylan would create an entity with more than $30 billion in annual revenue, add to earnings in the first year and eventually generate $2 billion in annual savings.
The purchase of Mylan would also help Teva expand its offering of harder-to-produce medical products, such as soft-gel caps, topical and inhalant technologies and injectables, and increase its portfolio of specialty pharmaceuticals.
In March, Teva said it would acquire neurology company Auspex Pharmaceuticals Inc for $3.5 billion to boost its portfolio of treatments for the central nervous system.
A Teva-Mylan deal would be the second-largest healthcare transaction in the last 12 months, following generic drugmaker Actavis Plc's $66 billion purchase of Botox maker Allergan.
The wave of consolidation has also included AbbVie Inc's proposed $21 billion purchase of Pharmacyclics and Valeant Pharmaceuticals' $11 billion deal for Salix Pharmaceuticals Ltd.
Mylan shares rose 8.9 percent to $74.04 in Nasdaq trading on Tuesday, while Teva gained 1.4 percent to $64.16 on the New York Stock Exchange. Perrigo fell 2.66 percent to $192.82.
(Reporting by Olivia Oran and Nadia Damouni in New York; Editing by Alan Crosby and David Gregorio)