Generic Drugmaker Mylan Offers to Buy Perrigo for $29 Billion

Offer comes amid rumors Teva planned bid for Mylan.

Bloomberg

In a surprise bid that could upset Teva Pharmaceutical Industries’ growth plan, the U.S. generic drug maker Mylan said on Wednesday it has offered to buy Perrigo for about $29 billion in cash and stock.

Mylan said it proposed to acquire Perrigo — which has traded on the Tel Aviv Stock Exchange since 2005, after it acquired the Israeli drug maker Agis Industries — at a price of $205 per share, representing more than a 25% premium over Perrigo’s April 3 closing price, the last trading day prior to the Mylan proposal.

Mylan Executive Chairman Robert Coury said the two companies have held several discussions about a proposed merger. Perrigo said its board will meet to discuss the proposal and that there’s no certainty an offer will be made.

The almost $29 billion offer is based on Perrigo’s $140.8 million outstanding shares as of January 30, in a move that would significantly beef up Mylan’s over-the-counter offerings.

The announcement came after the close of trading on the TASE, but in New York Stock Exchange trading on Wednesday shares of Perrigo rose nearly 25% percent to $205.54, while Mylan shares jumped 15.5% to reach $68.80 on the Nasdaq.

The Mylan bid comes amid weeks of rumors that Teva was eyeing a bid for Mylan. All three companies make generic drugs, but with a market capitalization of $55 billion, Teva is the biggest of them and had made its plans clear.

On Wednesday, some analysts speculated that Teva might now offer a counterbid for Perrigo. “It has been thought for quite some time that Perrigo is a takeover target,” Morningstar analyst Michael Waterhouse told Reuters.

“What will be interesting to see is if we end up in a bidding war,” Waterhouse said, suggesting Teva and Valeant Pharmaceuticals International as potential rival bidders.

Teva shares were up 2.9% in New York trading at midafternoon local time, at $66.05.

Mylan’s bid comes during a record period of consolidation for the global pharmaceutical industry.

Mylan agreed last year to acquire non-U.S. operations of Abbott Laboratories for $5.3 billion as part of a plan to move its tax domicile to the Netherlands, and Perrigo did a similar maneuver in 2013, acquiring Ireland’s Elan Corp.

Last month Perrigo spent about $4.5 billion to buy Omega Pharma of Belgium, one of the largest makers of over-the-counter drugs in Europe, which Perrigo said would make it one of the five largest OTC companies in the world.

Teva, meanwhile, agreed to buy the drug development company Auspex for $3.8 billion, leaving markets wondering whether the deal meant it would not pursue Mylan after all.