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Perrigo warming to Mylan - at the right price

Perrigo has already rejected three prior bids

Mylan 

Perrigo chief executive Joseph Papa has given the first indication the company might be willing to merge with Mylan, if a higher offer is placed on the table.

Papa's comments mark something of a turnaround in Perrigo's attitude to a takeover, given that three prior bids were summarily rejected as undervaluing the business. At last count, Netherlands-based Mylan was offering $75 in cash and 2.3 Mylan shares for each share in Perrigo, valuing the company at around $33bn.

Perrigo's CEO was speaking at an investor meeting hosted by UBS in New York, at which he suggested the two parties were "pretty far apart" at the moment on the valuation of his company, which is domiciled in Ireland. 

With Teva waiting in the wings to pounce on Mylan with its own $40bn offer - and valuations high for companies in the generic and specialty medicines sector - Papa is likely hoping that by opening the door a crack he can entice the Dutch company to come through with a higher offer.

The comments come in the midst of a wave of M&A activity in the mid-cap pharma sector. Most recently, Endo has just agreed an $8.1bn deal to acquire Par Pharmaceutical and boost its generics business. 

In a note on the meeting, UBS indicated that Papa had also suggested he would be interested in hearing from other potential buyers for the business, according to a Bloomberg report, which notes that Mylan has indicated it may bypass the Irish firm's board and offer a deal directly to shareholders.

The Dutch company has introduced a poison pill defense against any hostile takeover attempt by Teva based on the issuance of preferred shares to an independent foundation that would dilute shareholder voting rights.

Complicating matters, Mylan is also in the throes of negotiations with US antitrust regulators over the proposed Perrigo deal, which would create a company with annual revenues in the region of $15bn a year across the generics, specialty medicines and over-the-counter (OTC) drug sectors.

Article by
Phil Taylor

20th May 2015

From: Sales

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