Drugmaker Perrigo Company (NYSE:PRGO; TASE:PRGO) is ready to talk with Mylan N.V. (MYL) about its takeover bid but at a much higher price than it has offered so far, chairman and CEO Joseph Papa told the UBS healthcare conference in New York yesterday.
Mylan offered to acquire Perrigo last month in a cash and share deal worth over $33 billion but Perrigo's board of directors has so far improved three offers. At the same time, Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) has offered to acquire Mylan for more than $40 billion on condition that the Mylan-Perrigo deal does not go ahead.
UBS published a summary of Papa's speech at the conference in which he said that Mylan "substantially undervalued the company." In addition, he said that Mylan's rate of growth and profit multiple would lead to a dilution for Perrigo's shareholders. Papa added that the ROIC (return on investment capital) from the deal was not attractive and that if Perrigo decided to consider Mylan's offer, he would also discuss the matter with other potential buyers to achieve the best returns for shareholders.
UBS stressed that Perrigo's management is also committed to continue operating as an independent company but that it is shareholder friendly and would not create a poison pen (a mechanism to obstruct any takeover) and is ready to discuss being acquired at a higher price. Papa also stressed the upside of Perrigo's acquisition last week of Belgian company Omega for $3.8 billion.
UBS said that that in the long term Perrigo could achieve organic growth of 5-10% while continuing to seek non-organic growth opportunities.
Published by Globes [online], Israel business news - www.globes-online.com - on May 19, 2015
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