Perrigo rejects Mylan proposal

Perrigo says the deal undervalues the company and its prospects

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DUBLIN—A day after Mylan N.V. received an unsolicited acquisition proposal from Teva Pharmaceutical Industries Ltd. (read more about that here: 'Teva makes a move on Mylan') for $40 billion, the company got some more unwelcome news: Perrigo Co. plc announced that its board of directors had unanimously rejected Mylan's unsolicited non-binding proposal to acquire the company at $205 per share, for a total share price of $29 billion (brush up on that story here: 'Mylan announces $29B acquisition proposal for Perrigo'). Perrigo stated that “Following a thorough review, advised by its financial and legal advisors [Morgan Stanley & Co. LLC, acting through its affiliate, Morgan Stanley & Co. International plc, and Wachtell, Lipton, Rosen & Katz and A&L Goodbody, respectively], the 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.”
 
The company claimed that the proposal “would deny Perrigo shareholders the full benefits of Perrigo's durable competitive position and compelling growth strategy, which is reflected in the Company's three-year organic net sales compound annual growth rate goal for calendar 2014 to 2017 of 5-10 percent.” Perrigo also noted that the proposal doesn't account for the full benefits of its Omega Pharma acquisition, which closed on March 30 and which Joseph C. Papa, chairman, president and CEO of Perrigo, said makes Perrigo “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.” The proposal doesn't account for Perrigo's pipeline either, which it expects to generate roughly $1 billion in net sales over the next three years, the company noted.
 
"Perrigo's Board believes that the company has a strong independent future and is well positioned to continue to drive superior growth and shareholder value and provide high 'Quality Affordable Healthcare Products' to customers and consumers globally,” said Papa. “The Board's confidence is built upon the company's durable competitive position, compelling growth strategy and strong and consistent track record of delivering results for shareholders under its experienced management team. Since fiscal 2007, we have delivered compound annual sales growth of 16 percent, increased adjusted operating margin by over 1,600 basis points and generated total shareholder returns of over 970 percent."
 
Perrigo has certainly been active on its own in the acquisition arena in recent years, shelling out roughly $13.3 billion in three acquisitions in the last two years.
 
The earliest of those deals was Perrigo's February 2013 acquisition of Rosemont Pharmaceuticals Ltd., a specialty and generic prescription pharmaceutical company focused on the manufacturing and marketing of oral liquid formulations. Perrigo acquired Rosemont in a cash deal totaling £180 million that it said offered entry into an attractive market and promised synergy opportunity as well (check out that story here: 'Perrigo acquires Rosemont Pharmaceuticals for $283 million').
 
Just five months later, in what ended up being one of the largest M&A price tags for the year, Perrigo announced a definitive agreement under which it would acquire Elan Corp. plc via a new holding company, New Perrigo, incorporated in Ireland. The total transaction price came to roughly $8.6 billion, and was unanimously approved by both companies' boards of directors (check out our coverage on that deal: 'Perrigo acquires Elan for $8.6 billion').
 
A little more than a year after that, in November 2014, Perrigo made headlines with another multibillion-dollar deal, this time paying $4.5 billion to acquire Omega Pharma NV, one of the largest OTC healthcare companies in Europe. Perrigo purchased Omega's equity for €2.48 billion, in addition to the assumption of €1.1 billion in debt. Both companies' boards of directors unanimously approved the deal (see more on the transaction here: 'Perrigo snags Omega Pharma for $4.5B').


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