Monday 20 November 2017

Mylan launches surprise €26.5bn takeover bid for Dublin drug maker

Perrigo is best known in this country for its 2013 deal to buy Elan for almost €6.7bn
Perrigo is best known in this country for its 2013 deal to buy Elan for almost €6.7bn
Donal O'Donovan

Donal O'Donovan

US drug maker Mylan NV has launched a surprise offer to buy Ireland-based rival Perrigo for $28.9bn (€26.5bn) in a deal that would create a powerhouse for generic medicine.

The news sent stocks in both companies sharply higher yesterday. Shares in Perrigo were up 24pc after the offer was announced while Mylan stock rose 12pc.

Perrigo is best known in this country for its 2013 deal to buy Elan for almost €6.7bn, one of a slew of major deals in the sector that saw big US makers reap big tax savings by shifting their headquarters out of the US as a result of reverse mergers with a foreign takeover target.

Mylan makes about 1,400 medications. Its offer of $205 a share in cash and stock for Perrigo represents a 25pc premium over the company's share price on April 3, the last trading day before the bid was launched.

The takeover offer was formally made in a letter from Mylan's executive chairman Robert J. Coury to Perrigo's Joseph C. Papa:

"Dear Joe,

As you and I have discussed on a number of occasions over the past few years, a combination of Mylan and Perrigo offers clear and compelling strategic and financial benefits, has sound industrial logic, and would create a global leader with a unique and one-of-a-kind profile.

"We have complementary operations across all of our businesses, both from a product and geographic perspective.

"In an environment where scale and reach are becoming increasingly important, the combination of our companies would result in an unmatched global platform, substantial revenue and operating synergies, and enhanced long-term growth potential, all of which would serve to create significant value for the combined company's shareholders and other stakeholders," Mr Coury wrote.

In a statement Mylan said the proposal was the culmination of prior discussions between the two companies.

"This combination would result in meaningful immediate and long-term value creation, and our proposal is designed to deliver that value to shareholders and other stakeholders of both companies.

"We have great respect for Perrigo's board and management team and what they have built. We look forward in the weeks ahead to working with them to capitalise on this tremendous opportunity and working together to create a unique leader with a one-of-a-kind profile in our industry," it said.

The proposed deal is part of a wave of consolidation in the pharmaceutical industry that has already seen Mylan buy the non-US operations of Abbott Laboratories last year as part of a plan to move its tax address to the Netherlands.

Perrigo saw off competition in 2013 to acquire Irish Stock Exchange-listed Elan.

When it bought Elan, it shifted its HQ to Ireland to cut its effective tax rate.

Mylan's bid for Perrigio comes just weeks after the company was itself tipped as a potential target for a takeover bid from Israeli rival Teva Pharmaceutical Industries.

So-called tax inversion deals have been controversial in the US, where there are fears the shift overseas could damage the US tax base, though with both Perrigo and Mylan already Europe based that concern will not apply to the latest tie-up.

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