Mylan announces $29B acquisition proposal for Perrigo

The non-binding proposal offers $205 per share of Perrigo stock, to be paid in a combination of cash and Mylan stock, for a deal value of approximately $29 billion

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POTTERS BAR, England—Mylan N.V. has made a non-binding proposal to acquire Perrigo Company plc, with a price tag that could make it the largest deal of 2015 so far should it go through. Mylan's proposal, delivered on April 6, is a cash-and-stock transaction in which Perrigo shareholders would receive $205 in a combination of cash and Mylan stock per Perrigo share, for a total deal value of about $29 billion. The transaction price represents a premium of more than 25 percent to the trading price of Perrigo's stock as of April 3, the last trading day before the proposal, a premium of more than 29 percent to Perrigo's 60-day average share price and a premium of more than 28 percent to Perrigo's 90-day average share price.
The proposal is subject to the pre-condition of confirmatory due diligence, which can be waived by Mylan at its discretion. It is not an announcement of a firm intention to make an acquisition offer.
In responding to the unsolicited proposal, Perrigo issued a press release confirming it had received Myland proposal, and that “The Board of Perrigo will meet to discuss the proposal, and a further announcement will be made when appropriate.”
“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,” Robert J. Coury, executive chairman for Mylan, noted in a statement. “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. We have great respect for Perrigo's board and management team and what they have built. We look forward in the weeks ahead to working with them to capitalize on this tremendous opportunity and working together to create a unique leader with a one-of-a-kind profile in our industry.”
In a letter to Joseph C. Papa, chairman, president and CEO of Perrigo, Coury commented that “This is the right time for our two companies to move forward together, and Mylan and our Board are firmly committed to making this combination a reality.”
The combination, he added, “offers clear and compelling strategic and financial benefits, has sound industrial logic, and would create a global leader with a unique and one-of-a-kind profile,” given the companies' complementary operations. The combined company would have a diversified portfolio with “critical mass across generics, OTC, specialty brands and nutritionals,” a strong commercial platform, strong R&D capabilities and a “world-class operating platform, including an unrivaled combined manufacturing platform, renowned supply chain capabilities, vertical integration and global sourcing excellence.” Coury added that the combined company would have roughly $15.3 billion in 2014 pro forma sales, substantial cash flow and “compelling synergies resulting in operating margin expansion and EPS accretion.”
In terms of the management of the combined unit, Coury noted that Mylan's board would like to offer Papa the chance to serve as co-chairman with him, and that Mylan is “hopeful that, among others at Perrigo, Judy Brown [executive vice president and chief financial officer] and Todd Kingma [executive vice president, general counsel and secretary] would be willing to serve in important roles with the combined company.”
In other recent news, both companies shared announcements of positive advancements for respective drugs. Mylan announced on April 7 the U.S. launch of the first generic version of Warner Chilcott's Generess Fe tablets: Norethindrone and Ethinyl Estradiol Tablets (Chewable) 0.8 mg/0.025 mg and Ferrous Fumarate Tablets, 75 mg (Chewable). Famy Care Ltd., Mylan's partner, received final approval from the U.S. Food and Drug Administration (FDA) for its Abbreviated New Drug Application (ANDA) for the product, which is indicated as a method of oral contraception. On April 8, Perrigo announced that it had secured final approval from the FDA for its ANDA for hydromorphone HCI extended-release tablets 8 mg, 12 mg and 16 mg. The FDA declared Perrigo's product to be therapeutically equivalent to Mallinckrodt Inc.'s Exalgo 8 mg, 12 mg and 16 mg. Exalgo is indicated for the treatment of chronic pain in opioid-tolerant patients who need continuous opioid analgesia for an extended span of time.

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