By Angela Chen
Mylan NV raised its offer to buy generic drug maker Perrigo Co.
to about $33 billion and was promptly rebuffed, the latest moves in
a three-way takeover tussle in the pharmaceutical industry.
Mylan's bid consists of $60 in cash and 2.2 Mylan shares for
each share of Perrigo. Based on Thursday's close, the offer values
Perrigo at about $222 a share. That's up from Mylan's earlier
approach of $205, which was an unspecified mix of cash and
stock.
In rejecting the offer, Perrigo said the bid was "lower than the
previously rejected proposal" based on Mylan's unaffected share
price before it became a takeover target itself.
Mylan shares have surged 28% in April, boosted in part by the
company receiving its own $40 billion takeover approach from Teva
Pharmaceutical Industries Ltd. Mylan has spurned Teva, but a
representative for Teva said the company remains "fully committed"
to its offer for Mylan.
Perrigo's shareholders also showed disappointment with Mylan's
new offer, sending Perrigo's shares down 3.4% to $194.73 in
late-day trading. Mylan shares edged up 3.1% to $75.98, and Teva
gained 1.2% to $64.
Mylan said Friday its bid would be subject to the approval of
its own shareholders, underscoring the limited room for maneuver
the company may have in trying to purchase Perrigo now that it also
has an offer on the table from Teva.
The three-way fight represents the latest deal-making surge in
an industry grappling with slowing growth. At the heart of the
frenzy is a quest for new revenue amid pricing pressure from
cash-strapped governments and insurers, and increased
competition.
Mylan and Perrigo generally compete in different segments of the
generic-drug business. Mylan is best known for selling generic
prescription drugs, though its top-selling product is the EpiPen
emergency treatment for allergic reactions. Perrigo makes
over-the-counter cough-and-cold remedies and infant formula for
chains like Wal-Mart Stores Inc. and Walgreens, which sell the
products under their own names.
Neither company is a household name, but a combination of Mylan
and Perrigo would create one of the world's top sellers of
low-price medicines with $15.3 billion in yearly sales.
Mylan said its nonbinding offer is fully financed, cash
confirmed and not conditional on due diligence. The company
estimated its investors would own about 62% of the combined
company's shares, with Perrigo's holders owning the remaining 38%.
It added the deal should result in at least $800 million in
synergies by the end of the fourth year after the deal closes.
Under takeover rules in Ireland, where Perrigo is based, Mylan
is obligated to make a public announcement once it has started the
formal process of acquiring another company.
Meanwhile, a merger of Mylan and Teva--an Israeli company that
says its medicines account for one out of every eight prescriptions
in the U.S.--would create the world's top-selling generic-drug
company with more than $30 billion in sales in 145 countries.
Teva, known for its Copaxone multiple-sclerosis drug, has said
it is a natural fit with Mylan and the scale of the combined
company would help it better manage costs in the low-margin
generics business. It added a tie-up would bolster its ability to
develop low-price knockoffs of biotech drugs, a new market that
offers the potential for significant growth.
Write to Angela Chen at angela.chen@dowjones.com
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