Acquisition attempts can often last months as the pursuing companies try to woo their targets' shareholders and the pursued firms dig in their heels, and the ongoing saga of Mylan N.V., Perrigo Company plc and Teva Pharmaceutical Industries Ltd. are no exception.
April saw the beginning of the three-sided acquisition standoff, as Mylan N.V. announced a $29-billion non-binding proposal for Perrigo Company plc and Teva Pharmaceutical Industries Ltd. issued its own billion-dollar bid, proposing to acquire Mylan for nearly $40 billion (read more on this in “Two's company, three's a crowd?" from our May issue). Both Mylan and Perrigo turned down their respective proposals multiple times, citing proposals that were too low or undervalued the company, but Teva and Mylan refused to be discouraged, continuing to press their suits. In mid-June, Teva announced that it had acquired 4.61 percent interest in Mylan, but by the end of July, Teva had apparently had enough, withdrawing its proposal and announcing its acquisition of Allergan Generics for $40.5 billion instead.
Mylan, however, has held firm in its pursuit, just as Perrigo has continued to staunchly reject the proposed deal. Mylan raised its proposal price in late April, and announced that it had received regulatory clearance from the European Commission for the acquisition at the end of July. In the middle of August, the company lowered the acceptance condition for its offer from not less than 80 percent of Perrigo's ordinary shares to greater than 50 percent of its ordinary shares.
On August 28, Mylan announced that at an extraordinary general meeting of shareholders, the company's shareholders approved the proposed acquisition of Perrigo by two-thirds of the votes cast at the meeting, with a majority of all outstanding ordinary shares supporting the deal. With this, Mylan has cleared a hurdle to take its offer straight to Perrigo's shareholders.
"We sincerely appreciate our shareholders' overwhelming support of this transaction, as well as their support of Mylan's ongoing strategy,” Robert J. Coury, executive chairman of Mylan, said in a press release. “We believe the vote underscores shareholders' clear understanding of, and support for, the strategic rationale and potential for value creation inherent in the combination of Mylan and Perrigo. We look forward to launching our formal offer directly to Perrigo shareholders in the coming weeks, and we are very confident that they too will support this unique and compelling transaction."
For its part, however, Perrigo seems equally confident its shareholders will largely reject the offer, which it noted in a press release the same day Mylan shared the results of its shareholders' vote.
"Following extensive discussions with our shareholders, we are confident that most of them believe that Mylan's offer substantially undervalues Perrigo and would dilute our growth profile and superior valuation. The offer also would subject Perrigo shareholders to Mylan's highly troubling governance approach and serious risks related to Mylan's lowered 50-percent+ acceptance condition. Investors, rating agencies and leading proxy advisory services have noted that the lowered threshold would make any synergy targets more difficult to achieve, raise integration and execution risk and add additional downward pressure on Mylan's credit rating … We are confident that the majority of Perrigo shareholders will not tender their shares to Mylan," said Joseph C. Papa, chairman, president and CEO of Perrigo.
Prior to Mylan's general meeting, Perrigo shared a recommendation from Institutional Shareholder Services (ISS), a leading independent proxy advisory firm, that Mylan's shareholders vote against the offer. The ISS report noted that "Approving this proposal requires too heavy a belief that the 'real' synergistic opportunity is much greater than Mylan has been able to demonstrate, that these synergistic opportunities will be realized much more quickly than Mylan has been willing to say, that the acquisition can be completed at a price even Mylan appears to have signaled is unlikely to win over the requisite 80 percent of Perrigo shareholders, and that an acquisition will be completed much more quickly and smoothly than the structural issues suggest is likely." Mylan responded to the report by saying that “ISS fails to comprehend the potential for medium and long-term value creation for Mylan shareholders, the compelling synergy opportunity, the potential for meaningful multiple expansion and the ability to take advantage of the continuing consolidation in our industry. ”
In the midst of this, Perrigo has been establishing deals of its own, announcing June 2 that it had entered into an agreement with GlaxoSmithKline Consumer Healthcare to acquire a portfolio of over-the-counter (OTC) brands, which GSK is divesting in conjunction with its joint venture with Novartis. The assets include GSK's NiQuitin nicotine replacement therapy business, primarily in the European Economic Area (EEA) and Brazil, and Novartis' legacy Australian NRT business, including the Nicotinell brand; assorted OTC brands including Coldrex across the EEA and Panodil, Nezeril and Nasin in Sweden; and Novartis' legacy cold sore management products primarily in the EEA marketed under brand names Vectavir, Pencivir, Fenivir, Fenlips and Vectatone. This portfolio saw net sales of roughly $110 million last year. Perrigo announced the completion of the purchase on August 28, acquiring the assets in an all-cash transaction valued at €200 million (approximately $223.6 million).
On July 22, the company announced an agreement to acquire Naturwohl Pharma GmbH with its leading German dietary supplement brand, Yokebe, which is expected to see roughly €30 million (approximately $33.5 million) in full-year 2015 net sales.
