Mylan Loses Hostile Bid for Perrigo--2nd Update
November 13 2015 - 10:08AM
Dow Jones News
By Liz Hoffman, Chelsey Dulaney and Vipal Monga
Mylan NV lost its $26 billion hostile bid for Perrigo Co. after
a seven-month pursuit, a rare outcome in what shaped up to be one
of the most bitter takeover battles in decades.
Mylan said Friday that about 40% of Perrigo's shares were
tendered in the offer. It needed at least 50% to take control of
its smaller rival. The Wall Street Journal had reported Thursday
night that Mylan was set to lose the bid.
The cash-and-stock offer expired 8 a.m. Friday, but most
institutional investors had to tender by Thursday night to be
counted by the national stock clearinghouse known as DTC, the
Journal reported.
Shares of Mylan rose 8.8% to $47.01 a share in morning trading,
while Perrigo shares fell 7.4% to $145 a share.
The sharp drop in Perrigo's share price was "not a surprise,"
said Judy Brown, Perrigo's chief financial officer. Ms. Brown said
Friday that Perrigo would begin buying back its shares immediately
to take advantage of the stock decline.
The company said it aims to buy back at least $500 million by
the end of the year. Perrigo unveiled the buyback last month as it
sought to satisfy its investors.
The company also will begin to execute a plan to cut staff,
divest units and consider possible mergers, she said.
"We are continuing to look at transactions," Ms. Brown said.
Mylan Chief Executive Robert J. Coury said the company "viewed
Perrigo as a unique and exciting opportunity, but not one that was
required for the future success of our company."
Mylan has been trying since April to acquire Perrigo, a maker of
store-brand versions of cold and allergy medicines. 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.
There have been $532 billion of health-care takeovers announced
in 2015, according to Dealogic, up more than 60% compared with the
same period a year earlier.
Mylan's loss will hurt hedge funds that bought big blocks of
Perrigo stock in recent months, hoping for a deal. Among the
largest Perrigo holders are John Paulson's firm Paulson & Co.,
which had a roughly $500 million stake, as well as Elliott
Management Corp. and Highfields Capital Management LP, which each
had more than $300 million invested in the Ireland-based drug maker
as of Wednesday, filings show.
Hedge funds with big pharmaceutical holdings have been battered
recently, as scrutiny of drug pricing and a broader selloff in
biotechnology stocks has made the sector one of the
worst-performing of late.
Perrigo, meanwhile, joins a small club of companies that have
successfully beaten back a tender offer on persuasion alone,
without traditional corporate defenses. Irish takeover rules give
boards of target companies few tools to shield themselves or find a
"white knight" buyer, leaving Perrigo at the mercy of
shareholders.
Perrigo last month unveiled cost cuts and a share buyback meant
to satisfy investors. And the company briefly considered a large
deal, including a takeover of Endo International PLC, The Wall
Street Journal earlier reported. But as the bid entered its final
weeks, Perrigo's board backed a stand-alone strategy that would put
the company's fate in the hands of its investors--and in the
ability of its chief executive, Joe Papa, to win them over.
Having done so, Perrigo must now confront its independent
future. The company is still a target, owing in large part to its
Irish domicile, which makes it an attractive tax base for a larger
U.S. rival. And it must deliver on the cost cuts it promised
investors last month.
Write to Liz Hoffman at liz.hoffman@wsj.com, Chelsey Dulaney at
Chelsey.Dulaney@wsj.com and Vipal Monga at vipal.monga@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
November 13, 2015 09:53 ET (14:53 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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