Perrigo rejects new Mylan bid

Perrigo on Friday rejected Mylan's formal offer to buy the company for around $33 billion, consisting of $60 in cash and 2.2 Mylan ordinary shares for each Perrigo ordinary share. According to Perrigo, the bid is actually lower than Mylan's April 8 non-binding proposal of $205 per share of cash and stock, or about $28.9 billion, which its board already dismissed as too low, and said now really offers $181.67 per share.

Perrigo based its calculation on Mylan's price of $55.31 per share on March 10, the last day of trading before its stock value was pushed up on widespread speculation that it might be acquired by Teva. The Israeli drugmaker made an offer of $82 per share, or roughly $40.1 billion, for Mylan on April 21, contingent on the company abandoning its pursuit of Perrigo. Meanwhile, based on Mylan's closing price on April 23, its proposal values Perrigo at $222 a share.

In its announcement of the formal offer for Perrigo, Mylan said its shareholders would own approximately 61.8 percent of the combined entity, with the remainder held by Perrigo investors. The drugmaker also said it expects the transaction to be immediately accretive to earnings and estimated that it would result in at least $800 million in annual savings by the end of the fourth year.

Mylan executive chairman Robert Coury stated "we are taking this next critically important step…in order to continue to ensure clarity and certainty around our intentions for investors, particularly in light of the strong market reaction to this combination and demands from investors." He added that while Mylan is "disappointed" by the decision of Perrigo's board of directors "to reject our proposal without entering into discussions thus far, we are still hopeful and confident that we can engage with [them] about our offer and how to best bring our organisations together."

However, Perrigo reiterated its advice that shareholders take no action in relation to the offer. Some have speculated that Perrigo could also be pursued by other companies, including Johnson & Johnson, with JP Morgan analyst Chris Schott saying it is "an attractive asset in a rapidly consolidating space."

Meanwhile, Teva commented that it remains fully committed to pursuing a deal with Mylan. Coury has previously said that "a combination [with Teva] is without sound industrial logic or cultural fit" and that overlap in the companies' businesses would make it "unlikely that any such combination could obtain antitrust regulatory clearances."

For related analysis, see ViewPoints: Perrigo to Mylan: 'your move'.

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