The deal’s rejection will now focus investors’ attention on Perrigo’s standalone strategy.
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Still, the end of the Perrigo deal was a setback for the 54-year-old Mr. Coury. Even though Mylan would’ve had to overcome integration challenges in melding the two companies, acquiring Perrigo would’ve given Mylan a new pipeline into the global over-the-counter consumer drug market.
Perrigo, calling the offer grossly inadequate, is urging shareholders to reject it the takeover. The fight-which briefly involved an unsolicited bid for Mylan by Teva Pharmaceutical Industries Ltd.-came during a year of fevered, at times contentious, deal-making between health-care companies.
When an initial offer was rejected by Perrigo, Mylan tried to move forward in a hostile takeover.
Mylan, which is based in the Netherlands and run from Pennsylvania in the U.S., had promised it would ask its shareholders to vote on changes to its corporate governance, including the nomination and election of directors, if it were to complete its bid for Perrigo. This makes it unlikely for Mylan to ever boast a takeover premium. Perrigo also questions Mylan’s reasoning behind its claim that the merger can result in $800 million of annual cost savings.
But their cash and stock offer failed to garner enough interest and the acceptance condition to the offer had “not been satisfied” the company said in a statement. Under Irish takeover law, Perrigo can only be fully acquired if over 80% votes are cast in its favor.
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The Wall Street Journal, citing “people familiar with the matter”, reported that Mylan’s efforts have fallen short. Perrigo, based in Allegan, Michigan, combined with Ireland’s Elan Corp. and now lists its headquarters as Dublin. The removal of the MYL bid and impact from the exit of event driven position will drive initial weakness but we think the stock can settle not far from now levels…If we assume PRGO can hold its historical trough level of 16.3x (-1 standard deviation from historical mean) then on the $9.45 2016E guidance outlook (including buyback) we get an implied value of $154 or -2% from current levels. Nonetheless, the fight still remains tooth-and-nail, and most analysts have refrained from speculating the outcome at this point.
