Sector News

Perrigo makes last-minute investor pitch as Mylan lays out Plan B

August 12, 2015
Life sciences
There’s just over two weeks left until Mylan’s shareholders vote on its proposed hostile takeover of Perrigo, and the Irish target is using the time to meet with shareholders of both companies. Right now, its leaders feel “good about where they stand,” according to Bernstein analyst Ronny Gal–but there are some question marks hanging over them, too.
 
Perrigo is “reasonably sure” that if Mylan does proceed, it won’t get the 80% of shares it needs to seal a deal–though “some of the large shareholders are ‘holding their cards close to their vest,'” execs admitted to Gal.
 
And if Mylan garners between 50% and 80%, things will get stickier. That would lead “to eventual acquisition of Perrigo by Mylan,” Gal wrote to clients on Tuesday, but Perrigo insists it would “also result in more significant value destruction.”
 
Mylan, for its part, disagrees. Its plan, if it hits between 50% and 80%: Once Mylan gets the majority of Perrigo shareholders to tender their shares, it can extend the tender for 60 days, giving those not wanting to own a minority subsidiary a chance to make a move. If the remaining Perrigo shareholders don’t take the bait, Mylan will run the companies separately, letting Perrigo’s stock “languish … allowing Mylan to buy the stock on the cheap,” Gal wrote. And as Mylan told him, once it gets board control, it’ll “be able to obtain the synergies despite the separation.”
 
If that happens, though, “Perrigo senior staff will likely leave,” Gal pointed out, and they cautioned that “Mylan’s experience with generics will not translate effectively to store brands.” As CEO Joseph Papa told Gal, he and his team work well together, and he “has no plans of retiring”–meaning they could potentially all end up exiting together and starting another venture.
 
Meanwhile, Perrigo has options to “increase its intrinsic value,” Gal wrote–a la Allergan , which did some major cost-cutting when it was under siege from Valeant last year. And as the Dublin drugmaker’s managers told Gal, they think “more capital return to shareholders is an ‘intriguing’ concept.”
 
And if Mylan doesn’t come away with its prize? It’ll survive, CEO Heather Bresch told investors last week. “We like Perrigo, but we don’t have to have Perrigo,” she said on the company’s Q2 conference call.
 
By Carly Helfand
 

comments closed

Related News

May 15, 2022

Novo Nordisk and Flagship Pioneering announce a strategic collaboration to create a portfolio of transformational medicines

Life sciences

The companies will explore opportunities to apply Flagship’s innovative bioplatforms – an ecosystem that currently comprises 41 companies – to scientific challenges in disease areas within cardiometabolic and rare diseases and initiate research programmes based on these.

May 15, 2022

BD, Babson set sights on bringing simple blood collection into the home

Life sciences

BD is expanding its long-running partnership with the blood collection company Babson Diagnostics. The two companies have been working together since 2019 on a device that can gather small volumes of blood from the capillaries in the fingertip without requiring any specialized training, and beginning with a focus on supporting primary care in retail settings.

May 15, 2022

CSL’s $11.7B Vifor buy, 2021’s biggest biopharma M&A deal, hits antitrust delay

Life sciences

Wednesday, Australian biotech CSL said (PDF) the regulatory review of its $11.7 billion acquisition of Switzerland’s Vifor Pharma will take “a few more months,” suggesting it won’t be able to close the transaction by June 2022 as previously expected.