Perrigo has rejected a second formal takeover offer from Mylan, saying that the latest deal on the table is actually lower than an earlier informal bid.
Mylan made a non-binding proposal to Perrigo’s board earlier this month to buy the company for $205 per share in a combination of cash and stock, which valued the company at a little under $29bn.
Under pressure from an unsolicited $40bn takeover attempt by Israeli rival Teva last week, Mylan has now upgraded the proposal to a formal offer of $60 in cash and 2.2 of its shares in return for each Perrigo share. It maintains that values the Irish company at $33bn.
However Perrigo – having already rejected the earlier bid out of hand as undervaluing its business – takes issue with Mylan’s interpretation of the deal, which values the bid at $222 per share.
It bases its own calculation on Mylan’s share price back in early March – before speculation of Teva’s offer started to circulate – and argues that makes the formal offer worth just over $181 per share.
“Shareholders are strongly advised to take no action in relation to the offer,” said Perrigo’s board in a statement issued on Friday.
Mylan’s offer would result in its shareholders owning almost 62% of the combined company, with the balance held by Perrigo’s investors, and would create a company with combined sales of $15bn and – according to Dutch company – the opportunity to reduce annual costs by around $800m.
The new entity would have a balanced portfolio in generic drugs, over-the-counter medicines, nutritional products, infant formula and vitamins, it said.
Meanwhile, Teva‘s long-awaited bid for Mylan would create a $30bn-a-year powerhouse in generic and speciality medicines, although it is expected that it would have to divest some businesses to satisfy anti-trust requirements.
Mylan seems just as reluctant as Perrigo to complete a deal, although it has not issued a formal rejection. It said that the combination was not a good fit and was unlikely to be acceptable to regulators as it would create a dominant generics player, but added it would review the offer.
Buoyed by Perrigo’s response to Mylan, Teva reiterated on Friday its determination to complete the merger.