Mylan takes $27 billion offer to Perrigo shareholders

HERTFORDSHIRE, England - Mylan on Monday announced that it has officially commenced its formal offer to acquire all outstanding ordinary shares of Perrigo in a deal valued at about $27 billion. 

 

Under the terms of the offer, Perrigo shareholders will receive $75 in cash and 2.3 Mylan ordinary shares for each Perrigo ordinary share. Perrigo shareholders will own approximately 40% of the combined company upon completion of the transaction.

 

"With the overwhelming support of Mylan shareholders, today we officially are taking our offer directly to the Perrigo shareholders," stated Robert Coury, Mylan executive chairman. "We are highly confident that the majority of Perrigo shareholders will support this full and compelling offer, particularly in the absence of any competing interest in this asset and the significant uncertainties, execution risk and lengthy timetable associated with Perrigo's standalone strategy."

 

Perrigo promised to formally review the offer within the next 10 days but have recently expresssed misgivings, noting that the offer significantly undervalues Perrigo. 

 

"[Y]our offer is neither compelling, nor accretive," Joseph Papa, Perrigo chairman and CEO, wrote in a public letter to Coury on Sept. 10. "It is not compelling because it substantially undervalues Perrigo and provides a meager change of control premium at best – in fact it is the lowest change of control premium of any biopharmaceutical deal valued over $5 billion since the start of 2012. And by your own admission, Mylan does not expect this offer to be accretive until 'year four' and then only if Mylan's synergy estimates are fully realized. If these optimistic synergy targets are missed, then the deal will become even more dilutive to Mylan's adjusted EPS and more financially unattractive for shareholders."

 

"Together, Mylan and Perrigo will 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," commented Heather Bresch, Mylan CEO, regarding the offer announcement. "This strategic rationale is only further strengthened by the rapid consolidation within our industry. While we believe 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, Mylan is committed and well-positioned to pursue the OTC segment independently given its global scale and capabilities."

 

Goldman Sachs is acting as financial advisor, and Cravath, Swaine & Moore is acting as legal advisor, to Mylan, with Arthur Cox acting as legal advisor in Ireland and NautaDutilh acting as legal advisor in the Netherlands.