Perrigo to cut 800 jobs, buy back shares in effort to fend off Mylan

Perrigo said Thursday that as part of efforts to deliver shareholder value to fend off a takeover attempt by Mylan, it will cut 800 jobs from its global workforce, representing about 6 percent of staff, and buy back $2 billion worth of shares. The company indicated that the actions, which include consolidating its global supply chain and refining its portfolio, are expected to boost earnings by 22 percent next year. CEO Joseph C. Papa remarked "the actions we are announcing today to drive substantial profit growth make the gross inadequacy of Mylan's offer clearer than ever."

The share repurchase plan will include $500 million of repurchases to be completed by the end of this year, with the remainder in buybacks to be completed over the next two to three years. In addition, Perrigo revealed that it has initiated the sale of its US vitamins, minerals and supplements business. Perrigo noted that the combined efforts should result in operational and tax synergies of $175 million on an annualised run rate.

As such, Perrigo said that it expects earnings of $9.45 per share next year, above analyst estimates of $8.92 a share. For 2015, the company predicts earnings of $7.75 per share.

"We are taking steps to ensure that we fully capture the benefits of our global platform to drive continued strong profit growth and build substantial shareholder value," Papa stated. "It is fundamentally irrational to believe Mylan can run this business better or more profitably than our team," Papa remarked, adding "Perrigo is positioned to create substantially more value than the Mylan offer, and on behalf of the board, I urge all shareholders not to tender."

Perrigo also announced that John Hendrickson, former executive vice president of global operations and supply chain, will be promoted to the position of president, effective immediately. Papa said Hendrickson "is the ideal leader to oversee the transformational initiatives announced today."

Earlier this week, Perrigo asked a US district court to halt Mylan from proceeding with its unsolicited takeover until it corrects "misleading" statements about the offer. In September, Perrigo's board called on shareholders to reject Mylan's offer of $75 in cash and 2.3 Mylan shares for each Perrigo share, stating that the offer undervalued the company.

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