Perrigo rejects Mylan deal in favor of organic growth

DUBLIN — Perrigo late Tuesday afternoon unanimously rejected the unsolicited proposal from Mylan, disclosed April 8, to acquire all of the outstanding shares of Perrigo for $205 per share in a deal valued at $29 billion. Following a thorough review, advised by its financial and legal advisers, Perrigo's board unanimously concluded that the proposal substantially undervalues the company and its future growth prospects and is not in the best interests of Perrigo's shareholders.

 

In the wake of Perrigo's rejection, Mylan shareholders have another deal to consider: Teva Pharmaceutical Industries earlier in the day submitted an unsolicited proposal to acquire Mylan in a deal valued at $40 billion. "Even though Perrigo rejected Mylan’s initial offer, Teva faces hurdles in its effort to acquire Mylan," The New York Times reported Tuesday. "Mylan is unlikely to simply walk away from its pursuit of Perrigo. But analysts think it will have to secure an agreement if it wishes to remain a stand-alone company." 

 

"The board believes the proposal substantially undervalues Perrigo and its growth prospects and that continued execution by the management team against our global growth strategy will deliver superior shareholder value," stated Joseph Papa, Perrigo president and CEO. "Perrigo has a long history of driving above market shareholder value through consistent growth with a focus on profitability and operational excellence, which is reflected in our organic net sales CAGR goal of 5% to 10% for the next three years. With the acquisition of Omega Pharma, we are a top five global OTC company with a diversified portfolio, a leading market position in key franchises and a strong and established global distribution platform. We will continue to capitalize on our durable competitive position by expanding our international platform organically and through future synergistic deals. These actions will advance our leadership in the global OTC marketplace."

 

Perrigo on Tuesday separately announced results for the  third quarter of fiscal 2015 ended March 28, and has provided guidance for calendar year 2015 in connection with its upcoming move to a calendar fiscal year. In the quarter, Perrigo generated record revenue, adjusted net income and operating cash flow, the company reported. In addition, Perrigo's three-year organic net sales CAGR goal from 2014 to 2017 is 5% to 10%.

 

Perrigo advised shareholders to take no action in relation to the Mylan proposal. "There can be no certainty that any firm offer will be made, nor any certainty as to the terms on which any firm offer might be made by Mylan," the company stated. 

 

Morgan Stanley is acting as financial adviser and Wachtell, Lipton, Rosen & Katz and A&L Goodbody are acting as legal advisers to Perrigo.