Mylan Says It Would Settle for 50% of Perrigo

Drugmaker lowers support level needed for hostile takeover.

Bloomberg News

Mylan, which is trying to buy drug maker Perrigo through a $34 billion hostile tender offer, on Thursday lowered the level of support it will require from Perrigo shareholders to push through the takeover.

Generic drug maker Mylan had been seeking more than 80% of Perrigo’s shares through the tender offer, but last week said that it might lower that threshold to more than 50%. It said its financing banks had agreed to the move.

Perrigo, which is traded on the Tel Aviv Stock Exchange and has operations in Israel, has steadfastly resisted the takeover proposal from Mylan, which itself had been the target of a hostile overture from Teva Pharmaceuticals. Teva recently walked away from Mylan to buy Allergan’s generic business.

Mylan said it will move forward with the tender offer after its August 28 shareholder meeting. Perrigo shares rose 0.7% to close at 724.20 shekels ($190.53) in TASE trading.

On Tuesday, two proxy advisory firms recommended that Mylan shareholders vote for the takeover but they have not yet recommended how Perrigo shareholders should proceed. Large financial institutions like mutual funds typically follow recommendations from proxy firms.

In Ireland, where Perrigo is based, takeover rules allow acquiring companies to take control of targets through a direct tender to shareholders.

If Mylan gets 50% to 80% of Perrigo shares through the offer, it can take control of the company’s board and eventually buy the remaining shares it needs to consolidate the operations.

That two-part process could have added costs such as delayed deal synergies, extended bridge financing fees, and the possible need to raise the offer price, Sanford C. Bernstein analyst Ronny Gal said in a research note earlier this week after meeting with Perrigo management.

Mylan has offered $205 a share, which Perrigo has said is too low. Mylan CEO Heather Bresch said last week that buying Perrigo is not a “must” for the company and the company has not raised its offer.

Gal said that odds of the transaction closing were less than 20% because Mylan’s premium over Perrigo shares did not justify tendering shares.