Perrigo rejects Mylan’s tender offer

Perrigo said its board of directors reviewed Mylan’s unsolicited tender offer to acquire all of the outstanding shares of Perrigo and in consultation with its financial and legal advisors, “unanimously determined that the offer substantially undervalues the company and does not adequately compensate shareholders for Perrigo’s exceptional growth prospects”.

On Tuesday, Mylan took its offer directly to Perrigo’s shareholders after it had been rejected by the company.

Perrigo Co. plc went on the attack today against the hostile takeover bid by Mylan N.V.

Mylan first proposed to buy Perrigo in April and, after being repeatedly rebuffed, launched a tender offer on Monday.

Netherlands-based Mylan has offered $75 in cash and 2.3 of its shares for each Perrigo share, currently worth about $188 per share, compared with Perrigo’s midday trading price of $181.53 per share. Mylan itself was quick to summarily dismiss an offer earlier this year from Teva Pharmaceuticals Ltd. that would have paid its shareholders a premium about four times what Mylan offered Perrigo, Brown said. They reiterated their argument that Perrigo has a far brighter future as a standalone company. Specifically, the firm noted that it would be expecting massive sales revenue (more than $29 billion, according to the company) from so-called “switches”, wherein prescription products are transformed into OTC products, and said it would also be pursuing pipeline growth via its own acquisitions. “Current Wall Street consensus forecasts estimate substantial double-digit dilution in year one”.

The bid doesn’t account for Perrigo’s growth prospects and a tie-up would also expose Perrigo shareholders to financial risks, as about two-thirds of Mylan’s bid consists of Mylan stock, “which we believe will face negative pressures going forward”, Papa wrote.

“It presents clear risks and would result in value destruction for shareholders”, Papa writes.