One of Israel’s leading businessmen and a shareholder in Perrigo Pharmaceuticals will next week vote against a $27 billion offer for the company from generic drugmaker Mylan Inc, saying the price is too low. The way he sees it, if the transaction doesn’t go through Perrigo shareholders could “experience an approximate $30 per share drop in the value of their portfolio, and lose the opportunity to receive $75 per share in cash”. He further said that Mylan’s low offer had been caused by Teva Pharmaceutical Industries Ltd. (ADR) (NYSE:TEVA) withdrawing its takeover bid for the company in July. That’s a premium of about 4 percent to the Friday closing price of Perrigo Co. shares, and the stock added $1.85 to $180.65 on Tuesday. Perrigo said that the proposed deal undervalued the company and that it would perform better on its own.
Dublin-based Perrigo did not immediately comment to Mylan’s announcement. Its offer has been protecting Perrigo’s stock from “the recent sell-off in the markets”, chairman Robert Coury wrote in a Tuesday letter to Perrigo chief Joseph Papa, estimating that Perrigo’s stock would otherwise be trading at around $150 per share.
All eyes are on Perrigo’s investors, who will have to decide whether to accept Mylan’s offer when the wannabe acquirer takes it to them next Monday. Teva’s bid, extended in April, valued Mylan at approximately $40 billion, or $80 a share.
“You pretend you could generate the same synergies whether you own 100 percent of Perrigo or whether you own only a control stake”, Mr. Papa stated. It was a deal that saw him land a stake of 10% in the maker of over the counter drugs and brought Perrigo to the bourse in Tel Aviv, where it is amongst the most heavily traded. Given it has been trading near 20 times its EPS forecast for a year ahead, Perrigo during early 2016 should be trading at around $190.
“If we wait a few months, we would have the same price without all the hassle and risk involved in a Mylan deal”, Arkin told Reuters on Thursday. It remains confident in Perrigo’s success without Mylan as well. Perrigo stock, on the other hand, closed 0.62% higher at $178.17 during the same timeframe.