Mylan is increasingly confident that it will succeed in its $27-billion hostile takeover of Perrigo, Financial Times reported Tuesday.
Under Irish takeover rules, Mylan will gain control of Perrigo if a majority of the latter's shareholders tender their shares in favour of the Dutch drugmaker's offer of $75 in cash and 2.3 Mylan shares for each Perrigo share.
Analysts believe that the composition of Perrigo's shareholder register is favourable for Mylan's efforts, as 49 percent of the Irish company's stock is controlled by hedge funds which purchased shares in anticipation of a takeover.
Perrigo indicated that its long-term shareholders are unlikely to support an offer that represents only a 14-percent premium to its share price, in addition to the risk of owning stock in a company with a troubled relationship with its shareholders.
"Nobody loves the deal, but if Perrigo does not offer a decent alternative that will bring the stock to $190 as a base we think people might go with Mylan to lock in the profits in a volatile year," explained Bernstein analyst Ronny Gal, adding "it behoves Perrigo to come in with something in the next weeks and we kind of think they are."
"There are early signs that investors are tracking towards supporting a deal, although it still doesn't seem like a slam-dunk," cautioned Evercore ISI analyst Umer Raffat, who suggested that Perrigo's best chance of avoiding a takeover is to pursue an acquisition that makes the company too large for Mylan to purchase.