Despite having several offers rebuffed by Perrigo since its initial $29bn (€25bn) bid in April, Mylan continues to pursue the generic and OTC drugmaker.
Earlier this month Mylan upped its bid to $35bn and lowered the acceptance condition in its offer from at least 80% of ordinary shares to greater than 50%, prompting speculation about the operational implications of the revised proposal.
Mylan Robert Coury responded last week, explaining that if only the lower condition is achieved “Mylan is fully committed and prepared to operate Perrigo as a controlled subsidiary.”
Coury remained confident his firm would acquire greater than 80%, but added if the tender fell in the 50-80% range, “Mylan would have the ability to pass Perrigo ordinary resolutions, which will allow us to control the composition of Perrigo's Board of Directors and management team, and to effectively control Perrigo's day-to-day operations.”
Throughout the negotiations, Mylan has stressed a merger would create an unrivalled manufacturing network in the API and generics space, along with operational synergies of more than $800m.
However, Perrigo – the core business of which lies in the consumer healthcare sector – has repeatedly refuted the benefits of a merged company and with the lowering of the tender conditions to 50%, CEO Joseph Papa said: “Mylan already proposed a dilutive deal that substantially undervalues Perrigo; today's announcement makes it even worse.”
“Eat or be Eaten”
Analysts too have failed to see the strategic rationale behind combining operations, a view reiterated in a report released last week by research group Proxy Mosaic.
“Ultimately, we agree with Perrigo’s rejection of the deal in its current form,” the report concludes, adding Mylan’s enthusiasm for the acquisition “has come to look more like a ‘storm the castle’ strategy than anything resembling a prudent and deliberate approach.”
They also pointed out that the Perrigo bid came after a failed attempt by Teva to buy Mylan and “at a time of intense industry consolidation among large pharmaceutical companies, especially generic drugmakers.”
“More often than not, companies are taking an ‘eat or be eaten’ approach to potential acquisitions,” the report states, and “after rebuffing Teva’s offer… Mylan is getting a taste of its own medicine from Perrigo.”
Last month, Teva struck a $40.5bn deal to acquire the generics business of Allergan (formerly known as Actavis).