Perrigo rejects Mylan’s latest $34.10 bn bid

Irish generic drugmaker Perrigo Co yesterday rejected larger rival Mylan NV's revised takeover offer saying that the $34.10 billion unsolicited bid still undervalud the company.

Mylan, based in the Netherlands, had yesterday raised its offer to $75 in cash and 2.3 of its shares for each Perrigo share, as against its previously sweetened offer of $60 in cash and 2.2 Mylan shares. (See: Mylan raises bid for Perrigo Co to $34.10 bn)

The total offer price has now been raised to about $242 per share compared to the earlier offer of $222 per Perrigo share.

The rejection from Perrigo comes even as Mylan itself is fending off an unsolicited $40 billion takeover bid from Israeli generic drug giant Teva Pharmaceutical Industries.

The three-way hostile takeover battle highlights the desperate attempt by generic drug makers to consolidate in a market that is expected to rise to $358 billion next year.

Perrigo says that Mylan's offer is too low since its share value has risen due to month-long media speculation of Teva's plan to table a bid for Mylan and its stock price would fall if Teva's attempt were to fail, which would lead to a decline in Mylan's stock offer of $167 of its own share for Perrigo.

Perrigo's board notes that Mylan's cash and stock offer actually amounts to only $202.20 and not $242, based on Mylan's stock price on 10 March, ever since speculations about Teva considering a bid for Mylan.

''Today's announcement from Mylan continues to propose a price lower than the previously rejected proposal. Based on Mylan's unaffected price of $55.31per share on March 10, 2015, the last day of trading prior to widespread public speculation that Teva was considering an offer for Mylan, the value of the revised Offer is $202.20 per Perrigo share,'' said the Irish company in a statement.

Teva's bid for Mylan
Teva is confident that it would close the Mylan deal after sweetening its offer, but the only hurdle is the so called ''poison pill'' that Mylan could adopt. Some analysts opine this could be overcome if Teva made a compelling offer of over $92 a share, although Mylan has said that it would be only willing to talk if the takeover price is well in excess of $100 a share.

Sealing a deal may be difficult for Teva, since Mylan can take cover under the Netherlands' takeover laws, which can effectively block a hostile takeover attempt, just like Dutch telecoms company KPN did in 2013 to ward off a hostile takeover attempt by Carlos Slim's America Movil.

Mylan recently issued an option that lets an external foundation acquire a majority stake in the company at any time, which would block an acquirer from taking control, Bloomberg reported.

Teva has offered to pay Mylan shareholders $82 a share, around half in cash and half in stock, taking the deal value to around $40 billion. (See: Teva Pharmaceutical offers to buy Mylan NV for $40 bn)

Mylan has strongly rejected Teva's offer saying that the Israeli company has a ''dysfunctional culture'' and a ''poorly performing, troubled company'' which has constantly changed its CEO leading to a flat to negative growth outlook.

Mylan's executive chairman, Robert Coury said that the combination ''lacks industrial logic and is a terrible cultural fit.''

Despite the harsh criticism, Teva CEO, Erez Vigodman said on Monday, ''While we are disappointed that Mylan has formally rejected our proposal, the Teva Board and management team are fully committed to completing the combination of Teva and Mylan, and we stand ready to quickly complete a transaction that is compelling for both Teva and Mylan stockholders.''

A successful Teva-Mylan merger would become the world's fourth-largest pharmaceutical company by revenue behind Johnson & Johnson, Novartis and Roche.

Mylan is one of the world's leading generics and specialty pharmaceutical companies and sells its products in approximately 150 countries, with a portfolio of over 1,400 generic pharmaceuticals and several branded medications. It also offers a wide range of anti-retroviral therapies, and is one of the largest active pharmaceutical ingredient manufacturers.

Last year Mylan acquired Abbott Laboratories for $5.3 billion, a move that allowed it to move its corporate headquarters to the Netherlands, although it still runs the company from Canonsburg, Pennsylvania.

The New York Exchange-listed company has a market cap of around $33.5 billion and posted net profit of $929 million in 2014 on revenues of $7.6 billion.

Founded in 1887, Perrigo is the world's largest manufacturer of over-the-counter (OTC) drugs. It also makes general prescription drugs, infant formulas, nutritional products, dietary supplements and other products.

The company is also a leading provider of branded OTC products, generic extended topical prescription products, infant formulas, nutritional products, dietary supplements and also receives royalties from multiple sclerosis drug Tysabri.

Nearly half of Perrigo's $4.06 billion sales last year were generated from its consumer health-care division, including store-brand over-the-counter medicine like Sudafed and NyQuil.

The company's primary markets are spread over the US, Israel, Mexico, the UK, India, China and Australia.

Earlier based in Michigan, Perrigo moved its headquarters to Ireland through an inversion deal in 2013. It acquired Dublin-based Elan Corp for $8.6 billion, a move that is expected to bring in savings of an estimated $150 million a year in taxes.