Perrigo rejects Mylan’s $29 bn takeover offer

22 Apr 2015


Perrigo Company Plc yesterday rejected a $205 per share cash and stock takeover offer from its larger generic rival Mylan NV, saying the bid substantially undervalued the company.

Early this month, generic and specialty pharmaceuticals company Mylan NV tabled an unsolicited offer to buy Perrigo for about $29 billion, a move designed to expand its generic drug portfolio and also stave off from being a takeover target. (See: Generic drug maker Mylan to buy Perrigo Co for $29 bn)

''Following a thorough review, advised by its financial and legal advisors, the Board unanimously concluded that the Proposal substantially undervalues the Company and its future growth prospects and is not in the best interests of Perrigo's shareholders, the Ireland-based company said in a statement.

Perrigo said that key factors in rejecting Mylan's proposal include, the proposal substantially undervalues Perrigo's differentiated global business, including its leading market position in key franchises, and does not take into account the full benefits of its recent Omega Pharma acquisition.

It also said that the offer does not take into account Perrigo's innovative new product pipeline, which is expected to generate nearly $1 billion in net sales over the next three years, excluding sizable upside from potential new indications for its multiple sclerosis drug Tysabri.

Perrigo went on to say that it sees an annual sales growth rate of 5 to 10 per cent over the next three years, and that Mylan's proposal denies shareholders the full benefit of that growth.

Analysts opine that Mylan's bid for Perrigo as a defensive strategy to prevent Israel's Teva Pharmaceuticals from making an offer for Mylan.

Conforming recent market rumours, Teva yesterday tabled an unsolicited $40-billion takeover bid for Mylan, making the proposed acquisition a three-way contest (Teva Pharmaceutical offers to buy Mylan NV for $40 bn).

Although Mylan had made its offer for Perrigo on 8 April, Perrigo's rejection came just a few hours after Teva announced its takeover offer yesterday for Mylan.

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 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.

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