Perrigo Co rejects Mylan's $33-bn sweetened bid

25 Apr 2015


Generic drugmaker Mylan NV yesterday raised its takeover offer for Perrigo Co to $33 billion, in a move widely seen as an attempt to ward off an unsolicited bid from larger rival Teva Pharmaceuticals Industries Ltd.

Mylan, which itself is the target of an unsolicited $40-billion bid from Teva, raised its unsolicited takeover bid for Perrigo from $29 billion to about $31 billion, but the sweetened offer was immediately rejected by the Dublin-based company.

Mylan had earlier offered to pay $205 per share, comprising an unspecified mix of cash and stock, while its latest offer consisted of $60 in cash and 2.2 Mylan shares for each share of Perrigo. The proposal values Perrigo at about $222 a share, a 10-per cent premium over Perrigo's closing price yesterday.

It is also higher than Mylan's offer of $205 in cash and stock that Perrigo had rejected earlier this week as bring too low. (See: Generic drug maker Mylan to buy Perrigo Co for $29 bn)

Mylan, which will take its $31-billion offer directly to Perrigo shareholders, said that the cash portion of the bid will be financed by a new bridge credit facility arranged by Goldman Sachs.

Post closing, Mylan shareholders will own 61.8-per cent of the combined company, while the remaining 38.2- per cent would be owned by Perrigo shareholders.

Mylan said it expects the combination to result in at least $800 million of annual pre-tax operational synergies by the end of the fourth year.

Perrigo immediately rejected the sweetened offer saying that Mylan's latest offer ws lower to its previously rejected proposal. ''Based on Mylan's unaffected price of $55.31 per share on March 10, 2015, the last day of trading prior to widespread public speculation that Teva was considering an offer for Mylan, the value of the Offer is $181.67 per Perrigo share.''

Early this week, Israeli generic drug giant Teva offered to buy Mylan for $40 billion on condition that it drops its plans to buy Perrigo. (See: Teva Pharmaceutical offers to buy Mylan NV for $40 bn)

Earlier based in Michigan, Perrigo moved its headquarters to Ireland through an inversion deal in 2013. It acquired Dublin-based Elan Corp for $8.6 billion, a move that is expected to bring in savings of an estimated $150 million a year in taxes.

Founded in 1887, Perrigo is the world's largest manufacturer of over-the-counter (OTC) drugs. It also makes general prescription drugs, infant formulas, nutritional products, dietary supplements and other products.

The company is also a leading provider of branded OTC products, generic extended topical prescription products, infant formulas, nutritional products, dietary supplements and also receives royalties from multiple sclerosis drug Tysabri.

Nearly half of Perrigo's $4.06 billion sales last year were generated from its consumer health-care division, including store-brand over-the-counter medicine like Sudafed and NyQuil.

The company's primary markets are spread over the US, Israel, Mexico, the UK, India, China and Australia.

Mylan is one of the world's leading generics and specialty pharmaceutical companies and sells its products in approximately 150 countries.

It has a portfolio of more than 1,400 generic pharmaceuticals and several brand medications. It also offers a wide range of anti-retroviral therapies, and is one of the largest active pharmaceutical ingredient manufacturers.

Last year Mylan acquired Abbott Laboratories for $5.3 billion, a move that allowed it to move its corporate headquarters to the Netherlands.

The New York Exchange-listed company has a market cap of $33.5 billion and posted net profit of $929 million in 2014 on revenues of $7.6 billion.

The proposed merger would create a company with annual sales of about $15 billion.

Analysts opine that the world's largest generic drugmaker Teva has been eying Mylan and the proposed Perrigo deal has more to do with protecting itself from being acquired by the Tel-Aviv-based generic drugmaker.

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