Health Care and Manufacturing

Perrigo rejects latest acquisition offer

April 29, 2015
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Perrigo makes over the counter and generic prescription drugs. Photo via fb.com

A rival drug maker has upped its bid for over-the-counter medicine maker Perrigo, but Perrigo continues to refuse the company’s unsolicited offers.

Under the terms of the offer announced today by Mylan, which is based in the Netherlands, shareholders of Dublin-based Perrigo, which operates its North American base in Allegan, would receive $75 in cash and 2.3 Mylan ordinary shares for each Perrigo ordinary share.

Perrigo said today that it has rejected the offer.

“Shareholders are strongly advised to take no action in relation to the offer,” Perrigo said in a statement.

Offer No. 3

This is Mylan’s third offer in its attempt to acquire Perrigo and save itself from the threat of acquisition presented by another rival drug maker, Teva Pharmaceutical Industries, which is a maker of specialty and generic pharmaceuticals.

On April 21, Teva, which is headquartered in Israel, proposed to acquire all of the outstanding shares of Mylan in a transaction valued at $82 per Mylan share, with the consideration to be comprised of about 50 percent cash and 50 percent stock.

According to Perrigo, Mylan’s latest offer continues to undervalue the company.

“The board previously concluded that Mylan's unsolicited proposal of April 8, of $205 per share, significantly undervalued the company and its future growth prospects and was not in the best interests of Perrigo's shareholders,” Perrigo said.

Last week, Mylan upped its initial offer promising to acquire all of the outstanding shares of Perrigo for $60 in cash and 2.2 Mylan ordinary shares for each ordinary Perrigo share.

“Today's announcement from Mylan continues to propose a price lower than the 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 revised offer is $202.20 per Perrigo share.”

"25x" offer

Mylan, on the other hand, places the value of its latest offer at $232.23 per Perrigo share, which it said “represents a multiple of approximately 25x calendar year 2014 EBITDA (pro forma for Perrigo's recent acquisition of Omega Pharma).”

Mylan is basing its numbers on its closing stock price of $68.36 on April 8, 2015, "the first day of market reaction to the initial proposal."

According to Mylan, a completed transaction based on the latest offer would result in Mylan shareholders owning about 60.7 percent of the outstanding Mylan ordinary shares on a fully diluted basis and former Perrigo shareholders owning about 39.3 percent of the outstanding Mylan ordinary shares on a fully diluted basis.

"Hell or high water" commitment

Mylan executive chairman Robert Coury said of its bid for Perrigo, "Previously, Mylan filed for U.S. anti-trust clearance, made a ‘hell or high water’ commitment with respect to obtaining this clearance and committed to a timetable for closing. We have also secured firm committed financing for our offer.”

He said those efforts coupled with today’s action “will result in a transaction that provides compelling value and maximum speed and certainty to Perrigo and its shareholders.”

He added that if Mylan were to gain Perrigo, the transaction would “create a powerhouse company.”

For now, Perrigo is holding firm against the “powerhouse” promise.

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