April 10, 2015 by Steve Levine

Drug Maker Mylan Bids To Takeover Rival Perrigo

Pharmaceutical giant Perrigo has been expanding through acquisition for several years. Now it appears as if it may be acquired by rival drug firm Mylan. Mylan originally announced its bid proposal on April 8, 2015 in a press release. The bid would create a $29 billion company that will dominate generic and over-the-counter medications. The combined company could have annual pro forma sales of $15.3 billion.

A Brief Bio of the Principals

Perrigo has a significant share of the world market in areas such as over-the-counter and generic prescription drugs and infant formulas, along with specialty nutritional and dietary products. Most notably, Perrigo developed, and receives royalties from, the multiple sclerosis drug Tysabri. In a bid to gain a larger European foothold, Perrigo acquired Irish drug maker Elan in 2013 for $8.6 billion in cash and stock acquisition.

Mylan has been strengthening its global position in the generic drug market through acquisition as well. Most recently, the company purchased all of the branded non-U.S. and generics businesses of Abbott Laboratories for $5.3 billion. For more details about this acquisition read more about it over here.

 

Mylan Bid for Perrigo

Mylan is offering a combination of cash and stock acquisition as part of its takeover bid for Perrigo. To entice stockholders, Mylan is offering $205 per share, a premium of $24.50 over Perrigo’s 4-7-15 NYSE closing price. After news of the bid was announced Perrigo shares jumped more than 18 percent to close at $195, while Mylan shares rallied for a 14.76 percent gain, closing at $68.36.

Apparently, the deal has been in discussion for some time. According to a statement released by Robert Coury, Mylan Executive Chairman: ”This proposal is the culmination of a number of prior discussions between Mylan and Perrigo about the compelling strategic and financial logic of this combination. This combination would result in meaningful immediate and long-term value creation, and our proposal is designed to deliver that value to shareholders and other stakeholders of both companies.” Perrigo has not released a definitive statement about the deal other than to say its board of directors would meet to consider the bid ”when appropriate.” The deal could still hit regulatory snags or be rejected by shareholders even if the Perrigo board of directors votes to move forward.

Both companies have chosen to relocate their headquarters outside of the United States as part of the growing ‘‘tax inversion” movement in order to shore up their liquid and financial asset portfolio. Mylan is now headquartered in the Netherlands, while Perrigo has its HQ in Ireland. One reason for tax inversion to cut a company’s future U.S. tax bill. The Obama administration heavily criticizes corporate inversions, contending that they erode the American tax base, placing a lop-sided burden the average taxpayer. In 2014, the U.S. Department of the Treasury moved to close several of the tax loopholes that allow companies to take advantage of these tax, or corporate, inversions. You can read more about the new regulations in a September article on usatoday.com.

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