Mylan offers $28.9bn to buy Perrigo

Apr 08, 2015, 1:18 PM EDT
Tablets of over-the-counter allergy medicines, manufactured by Perrigo Co., are arranged for a photograph in Washington, D.C., U.S., on Monday, July 29, 2013.
Bloomberg/Bloomberg via Getty Images

On Wednesday Mylan NV offered to buy fellow drugmaker Perrigo Co. for $28.9 billion. Mylan said it proposed to acquire the Ireland-based company for $205 per share, representing more than a 25 percent premium over Perrigo's April 3 closing price, the last trading day prior to the Mylan proposal, accoridng to Reuters. Mylan Executive Chairman Robert Coury said the two companies have had several discussions about a proposed merger. The nearly $29 billion offer is based on Perrigo's $140.8 million outstanding shares as of Jan 30. "It has been thought for quite some time that Perrigo is a takeover target," Morningstar analyst Michael Waterhouse said.

The deal would be Mylan’s biggest, more than four times the size of anything else it has attempted, notes Bloomberg. Mylan’s bid would add to a record period of consolidation in the 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 address to the Netherlands. Perrigo completed a similar tax maneuver in 2013, acquiring Elan Corp. so it could be domiciled in Dublin. Both companies’ operating headquarters remain in the U.S. -- Mylan’s in Canonsburg, Pennsylvania, and Perrigo in Allegan, Michigan.

In a letter to Perrigo Chief Executive Joseph Papa, Mr. Coury said the deal offered “a broader variety of opportunities to our employees and increased stability for the communities,” reports the Wall Street Journal. The letter added that Mylan wanted Mr. Papa to be co-chairman of the combined company and a member of Mylan’s board. Both companies have headquarters in the United Kingdom: Mylan in Hertfordshire, England, and Perrigo in Dublin. As such, they benefit from lower corporate taxes than their American counterparts, giving them more flexibility in deal-making. In recent years, more businesses—especially in the medical and health-care industries—have attempted tax inversions, which is when an American company moves its tax home to a country such as the U.K. or Ireland for the lower taxes.