By Angela Chen
Mylan NV said it will make a formal offer, worth about $33
billion in cash and stock, to buy generic drug maker Perrigo Co.,
the latest move in a three-way takeover tussle in the
pharmaceutical industry.
Mylan, which had indicated earlier this month that it was
considering such a bid, said its offer 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. Perrigo
shares closed Thursday at $201.63 and were off 1.4% in recent
trading.
Mylan shares, meanwhile, have surged this month after the
company received its own takeover approach from Teva Pharmaceutical
Industries Ltd. worth about $40 billion.
Perrigo has thus far rejected Mylan's advance, and Mylan has
spurned Teva. A representative for Perrigo declined to comment
Friday, and a spokesperson for Teva said the company remains "fully
committed" to its offer for Mylan.
The three-way fight underscores the deal-making surge that is
under way 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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