Health Care and Manufacturing

Drug company makes hostile takeover bid for Perrigo

September 15, 2015
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Perrigo receives FDA approval for three new infant formulas
Perrigo’s infant-formula plants in Ohio and Vermont supply store-brand products across the globe. Courtesy Perrigo

A rival drug maker that has repeatedly attempted to acquire Perrigo is going directly to Perrigo’s shareholders with an offer.

Mylan, which is based in the Netherlands, offered yesterday to acquire all outstanding ordinary shares of Dublin-based Perrigo, which operates its North American base in Allegan.

Under the proposed offer, Perrigo shareholders would receive $75 in cash and 2.3 Mylan ordinary shares for each Perrigo ordinary share.

Perrigo shareholders would own about 40 percent of the combined company.

"19x" offer

Perrigo has resisted repeated attempts from Mylan to take over the company, saying Mylan’s offers have undervalued Perrigo and its growth prospects.

With this latest offer, Mylan defended the value to shareholders and pointed to the rapidly consolidating pharmaceutical industry as further rationale for accepting the offer.

“The price we are offering Perrigo shareholders represents a generous multiple of approximately 19x, based on Mylan's current share price, which is one of the highest multiples paid in our industry to date, taking into account recent large transactions, and we believe this multiple fairly reflects the intrinsic value of Perrigo,” said Robert Coury, executive chairman, Mylan.

OTC market

Mylan CEO Heather Bresch said the combination of Mylan and Perrigo would create “a unique and powerful force in our industry, with the scale, breadth and reach to create significant and sustained value for shareholders and all other stakeholders.”

Bresch said Perrigo “represents the most attractive entry point for Mylan to apply its global manufacturing and supply chain expertise and broad commercial reach to the over-the-counter category.”

Despite the benefits of acquiring Perrigo, Bresch said Mylan “is committed and well-positioned to pursue the OTC segment independently, given its global scale and capabilities.”

Perrigo’s response

Perrigo is advising shareholders to ignore this latest unsolicited offer.

“Shareholders are strongly advised to take no action in relation to the offer at this time, pending the board's review,” the company said yesterday.

Perrigo said its board will assess Mylan's offer and advise shareholders of its recommendation regarding the exchange offer within 10 business days.

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