Mylan's tender offer for Perrigo lapses

Mylan said Friday that its bid to acquire Perrigo lapsed after only around 40 percent of the latter's outstanding ordinary shares were tendered in the offer, falling below the required acceptance threshold of more than 50 percent. Sources had earlier suggested that the $26-billion hostile takeover bid was likely to fail. Shares in Mylan rose as much as 13.5 percent on the news, while shares in Perrigo plunged as much as 11.5 percent.

Robert Coury, Mylan's executive chairman, commented "as we have said all along, Mylan viewed Perrigo as a unique and exciting opportunity, but not one that was required for the future success of our company." Coury continued "we are well-positioned to quickly execute on the next strategic, value-enhancing opportunities for our business, some of which we have already identified." Under Irish takeover rules, Mylan is not permitted to make another offer for Perrigo for at least 12 months.

Mylan launched its tender offer, valued at $75 in cash and 2.3 Mylan shares for each Perrigo share, in September. The drugmaker's board later lowered the acceptance condition for moving forward with the deal from 80 percent of Perrigo shares to a simple majority.

Meanwhile, Mylan received unconditional clearance from the European Commission and tentative approval from the US Federal Trade Commission to move forward with the deal earlier this month.

Commenting on the news, Sanford C. Bernstein & Co. analyst Ronny Gal suggested that Mylan was overpaying for Perrigo. The analyst added that an unsuccessful bid would permit Mylan executives to pursue better moves such as share buybacks or acquisitions of generic assets from Pfizer or Sanofi.

Perrigo had urged its shareholders to reject the offer, arguing that the offer had a lower value that a previously dismissed non-binding proposal of $205 per share in stock and cash. Last month, Perrigo CEO Joseph Papa expressed confidence that company shareholders would reject the tender offer.

As part of its efforts to resist the takeover, Perrigo unveiled in October a cost reduction programme that included about 800 job cuts and a $2-billion share buyback programme.

"We have said all along that this offer from Mylan was a bad deal for our shareholders, as it significantly undervalued our durable business model and industry-leading future growth prospects," remarked Papa. The CEO continued "I am delighted that Perrigo shareholders voiced their clear support for this management team and our long-term strategy."

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