Elan buyer Perrigo could also become takeover target
Published 22/07/2014 | 02:30
Dublin-based drug company Perrigo, which last year acquired Elan for almost $9bn (€6.7bn), could become the latest takeover target in a frenzy of activity in the sector.
A deal could emerge as US healthcare companies rush to secure tax advantages abroad before the government steps in to make such activity more difficult.
Perrigo, which is listed in New York, has a market capitalisation of around $20bn.
When it bought Elan, it shifted its HQ to Ireland to cut its effective tax rate.
The amount of losses Elan had notched up were also attractive for Perrigo as they could be offset against future profits following the takeover.
Other drug companies have done likewise in so-called tax-inversion deals that help them to avail of Ireland's low 12.5pc corporate rate.
Abbvie has just agreed to pay almost $55bn for Shire, which is based in Ireland.
Perrigo, the Dublin-based maker of over-the-counter and generic medicines, is "an attractive takeout candidate for certain strategic buyers" due to its "durable, highly cash- flow generative business," according to David Steinberg, an analyst at Jefferies.
Shares in Perrigo soared nearly 10pc last week after it was reported that the company had hired an investment bank to consider a sale of the business.
Abbott Laboratories has been suggested as a possible buyer of Perrigo, but it is not a perfect strategic fit and Abbott has also traditionally shied away from deals of this size, said Chris Hamblett, an analyst at Cowen & Co.
AbbVie's announcement of the latest so-called tax inversion on may have upped the ante for the remaining US health companies to make a move before US lawmakers limit the deals.