Date: 2015-11-13
Type of information: Company acquisition
Acquired company: Perrigo (Ireland)
Acquiring company: Mylan (USA - PA)
Amount: $ 28.9 billion
Terms: * On November 13, 2015, Mylan announced that its offer to acquire all of the issued and to be issued share capital of Perrigo Company has lapsed. As of 8:00 AM Eastern Time on November 13, 2015 , 58,040,150 Perrigo ordinary shares, representing approximately 40 percent of outstanding Perrigo ordinary shares, were validly tendered in the offer. Accordingly, the acceptance condition to the offer, as outlined in the September 14, 2015 Offer to Exchange / Prospectus, has not been satisfied and the offer has lapsed in accordance with its terms. As the offer has lapsed, it is no longer capable of further acceptance and both Mylan and tendering Perrigo shareholders have ceased to be bound by prior acceptances. Any Perrigo ordinary shares which have been tendered by Perrigo shareholders have not been accepted for exchange and will be promptly returned to the relevant Perrigo shareholders. * On November 3, 2015, Mylan announced the U.S. Federal Trade Commission (FTC) has cleared the company's proposed transaction to acquire Perrigo subject to Mylan's divestiture of certain products following the consummation of the offer. The FTC clearance represents the final regulatory clearance needed by Mylan to close its acquisition of Perrigo and represents the last remaining condition that needs to be satisfied for the successful completion of the offer other than the acceptance condition. Under the terms of Mylan's offer, Perrigo shareholders will receive $75 in cash and 2.3 Mylan ordinary shares for each Perrigo ordinary share. On September 14, 2015 Mylan officially commenced its formal offer to acquire all outstanding ordinary shares of Perrigo . * On September 14, 2015, Mylan announced that it has officially commenced its formal offer to acquire all outstanding ordinary shares of Perrigo. Under the terms of the offer, Perrigo shareholders will receive $75 in cash and 2.3 Mylan ordinary shares for each Perrigo ordinary share. Perrigo shareholders will own approximately 40% of the combined company upon completion of the transaction. The offer is being made in accordance with Mylan's announcement (dated April 24, 2015 and amended on April 29, 2015 and on August 13, 2015 ) pursuant to Rule 2.5 of Irish Takeover Rules that set forth Mylan's legally binding commitment to commence an offer for the entire issued and to be issued share capital of Perrigo .The offer and withdrawal rights are scheduled to expire at 1:00 P.M. (Irish time)/ 8:00 A.M. ( New York City time) on November 13, 2015 , unless the offer is extended with the consent of the Irish Takeover Panel . The acceptance condition for the offer requires greater than 50% of Perrigo ordinary shares to have been tendered into the offer. Goldman Sachs & Co is acting as financial advisor, and Cravath, Swaine & Moore LLP is acting as legal advisor, to Mylan, with Arthur Cox acting as legal advisor in Ireland and NautaDutilh acting as legal advisor in the Netherlands. * On September 10, 2015, Perrigo Company responded to Mylan letter to Perrigo dated September 8th, 2015. Perrigo Chairman, President and CEO Joseph C. Papa sent the following letter to Mylan Executive Chairman Robert J. Coury clarifying numerous misleading statements made by Mylan and reiterating Perrigo's confidence that Perrigo shareholders will not tender into Mylan's value-destructive offer. The full text of the letter is below: * On September 8, 2015, Mylan announced its intention to commence on Sept. 14, 2015 its formal offer to exchange all outstanding ordinary shares of Perrigo. Under the terms of the offer, Perrigo shareholders will receive $75 in cash and 2.3 Mylan ordinary shares for each Perrigo ordinary share. Mylan Executive Chairman Robert J. Coury also sent a letter to Perrigo Chairman and Chief Executive Officer Joseph Papa reiterating Mylan's commitment to the transaction and respect for Perrigo and its employees, re-affirming the compelling value of the Mylan offer to Perrigo shareholders, and outlining to Perrigo shareholders their clear and direct pathway to completion of the transaction. This letter follows Mylan's Extraordinary General Meeting on Aug. 28th, at which Mylan shareholders voted overwhelmingly in favor of the transaction. * On August 28, 2015, Perrigo commented on the Mylan shareholder vote regarding its planned unsolicited offer to acquire Perrigo. "Our views of Mylan's offer to Perrigo shareholders have always been, and will continue to be, based on our Board's careful reflection of the value available to Perrigo shareholders, and do not depend on the limited choices that Mylan has allowed its shareholders to consider," said Joseph C. Papa, Chairman, President and CEO. "Following extensive discussions with our shareholders, we are confident that most of them believe that Mylan's offer substantially undervalues Perrigo and would dilute our growth profile and superior valuation.[ii] The offer also would subject Perrigo shareholders to Mylan's highly troubling governance approach and serious risks related to Mylan's lowered 50%+ acceptance condition.[iii] Investors, rating agencies, and leading proxy advisory services have noted that the lowered threshold would make any synergy targets more difficult to achieve, raise integration and execution risk and add additional downward pressure on Mylan's credit rating."[iv] Mr. Papa continued, "Perrigo's experienced management team has an outstanding record for creating value, generating total shareholder return of more than 970 percent since 2007.[v] We remain focused on our 'Base Plus Plus Plus' growth strategy – realizing an organic net sales CAGR goal of 5-10% over the next three years, compelling upside from $29 billion in prescription to OTC switches, attractive M&A opportunities that we believe will have a multiplier effect on earnings and cash flow generation, and sizable potential new indications for Tysabri®.[vi] The entire Perrigo Board and management team are confident that, through continued successful execution of this growth strategy, and considering other opportunities that may be available to us over time, we will continue to create superior value well in excess of Mylan's offer, and with less risk. We are confident that the majority of Perrigo shareholders will not tender their shares to Mylan." * On August 28, 2015, Mylan announced that its shareholders have approved Mylan's proposed acquisition of Perrigo and the related issuance of Mylan ordinary shares to Perrigo's shareholders at an extraordinary general meeting of shareholders held today. The transaction received the approval of two-thirds of the votes cast at the extraordinary general meeting. In addition, the transaction received support from more than a majority of all outstanding ordinary shares. * On August 13, 2015, Perrigo responded to the announcement that Mylan has lowered the acceptance condition for its proposed unsolicited offer to acquire Perrigo from not less than 80% of Perrigo ordinary shares to greater than 50% of Perrigo ordinary shares. Perrigo Chairman, President and CEO Joseph C. Papa said, "Mylan already proposed a dilutive deal that substantially undervalues Perrigo; today's announcement makes it even worse. This scare tactic is simply an attempt to coerce Perrigo shareholders into a value destructive deal. We don't believe Perrigo shareholders will tender into this transaction at any threshold and we are confident that there is no rational path to a full acquisition of Perrigo." "This move is an obvious sign of desperation that would have profoundly negative effects for shareholders, debtholders, customers and employees of both Perrigo and Mylan. Under Irish law, this structure all but guarantees that the promised synergy realization will fail and it would create material credit and equity risk for both companies – none of which Mylan has detailed to its own shareholders or ours." Papa continued, "This reckless action runs contrary to the best interests of both Perrigo and Mylan shareholders, taking a value destructive transaction and making it materially worse when Mylan fails to achieve the 80% threshold necessary for consolidation. This is yet another example of Mylan's leadership disregarding their fiduciary responsibilities to represent the best interests of shareholders." * On August 13, 2015, Mylan announced that it has formally lowered the acceptance condition for its offer to acquire Perrigo from not less than 80% of Perrigo ordinary shares to greater than 50% of Perrigo ordinary shares. As previously announced, on Aug. 6, 2015, Mylan entered Amendment No. 2 to its bridge credit agreement which allows Mylan to lower the acceptance condition to a number of Perrigo ordinary shares representing more than 50% of the voting rights then exercisable at a general meeting of Perrigo without further consent from the lenders. * On July 29, 2015, Mylan announced that it received regulatory clearance from the European Commission under the European Union Merger Regulation (EUMR) for its proposed acquisition of Perrigo. As previously announced, on April 24, 2015, Mylan issued a Rule 2.5 announcement (amended on April 29, 2015) under the Irish Takeover Rules setting forth its legally-binding commitment to commence an offer directly to the Perrigo shareholders for the entire issued and to be issued share capital of Perrigo. The proposed transaction remains subject to certain conditions and other terms set forth in the formal Rule 2.5 announcement. * On May 25, 2015, Mylan announced that it was asked by the Irish Takeover Panel to issue the following clarification and retraction in accordance with the Irish Takeover Rules, relating to its firm intention to make an offer to acquire the issued and to be issued shares of Perrigo. The clarification and retraction relates to certain forward-looking statements made by Mylan specifically during The Pendency Of The Offer Period concerning its long-stated target since 2012 of at least $6.00 in adjusted diluted earnings per share ("EPS") by 2018, including recently in Mylan's first quarter earnings press release of May 5, 2015. Subsequent to the May 5 earnings release, Perrigo submitted a complaint to the Irish Takeover Panel alleging that the reference to Mylan's long-term target should be treated as a forward-looking profit forecast statement for purposes of the Rules, and therefore must comply with the terms of the Rules. Although Mylan's longstanding adjusted diluted EPS goal has been a well stated long-term target, and not a forecast of Mylan, at least during the offer period as it pertains to the Perrigo transaction, Mylan will no longer refer to that 2018 target or any other forward looking statements beyond 2015 that could constitute profit forecasts under the Rules. * On April 29, 2015, Mylan announced that, further to its announcement issued pursuant to Rule 2.5 of the Irish Takeover Rules on April 24, 2015, it has increased its offer to acquire the issued and to be issued shares of Perrigo. Under the terms of the increased offer, Perrigo shareholders will receive $75 in cash and 2.3 Mylan ordinary shares for each Perrigo ordinary share (the "Increased Offer"). Based on Mylan's closing stock price of $68.36 on April 8, 2015, the first day of market reaction to the initial proposal, the value of today's offer is $232.23 per Perrigo share, which represents a multiple of approximately 25x calendar year 2014 EBITDA (pro forma for Perrigo's recent acquisition of Omega Pharma). * On April 24, 2015, Perrigo Company announced its rejection of the unsolicited offer from Mylan to acquire all of the outstanding shares of Perrigo for $60.00 per share in cash and 2.2 Mylan ordinary shares for each ordinary Perrigo share. The Board previously concluded that Mylan's unsolicited proposal of $205.00 per share significantly undervalued the Company and its future growth prospects and was not in the best interests of Perrigo's shareholders. Today's announcement from Mylan proposes a price that is lower than the previously rejected proposal. Based on Mylan's unaffected price of $55.31 per share on March 10, 2015, the last day of trading prior to widespread public speculation that Teva was considering an offer for Mylan, the value of the Offer is $181.67 per Perrigo share. Shareholders are strongly advised to take no action in relation to the Offer. * On April 24, 2015, Mylan issued a Rule 2.5 announcement setting forth its legally-binding commitment to commence an offer for the entire issued and to be issued share capital of Perrigo. Under the terms of the offer announced, Perrigo shareholders will receive US$60 in cash and 2.2 Mylan ordinary shares for each Perrigo ordinary share. The offer is subject to certain conditions and other terms set forth in the formal Rule 2.5 announcement. The offer is fully financed, cash confirmed and not conditional on due diligence. It is expected that, following the consummation of the transaction, Mylan shareholders will own approximately 61.8% of the outstanding Mylan ordinary shares on a fully diluted basis and former Perrigo shareholders will own approximately 38.2% of the outstanding Mylan ordinary shares on a fully diluted basis. * On April 21, 2015, Perrigo Company announced that its Board of Directors has unanimously rejected the unsolicited Proposal from Mylan, disclosed April 8, 2015, to acquire all of the outstanding shares of Perrigo for $205.00 per share. Following a thorough review, advised by its financial and legal advisors, the Board unanimously concluded that the Proposal substantially undervalues the Company and its future growth prospects and is not in the best interests of Perrigo's shareholders. Perrigo estimates that the proposal substantially undervalues its differentiated global business, including the Company's leading market position in key franchises, global distribution platform, and proven expertise in product development and supply chain management and does not take into account the full benefits of the Omega Pharma acquisition, which closed on March 30, 2015, including additional value to be derived from synergies and increased global presence. Morgan Stanley & Co. LLC acting through its affiliate, Morgan Stanley & Co. International plc is acting as financial advisor and Wachtell, Lipton, Rosen & Katz and A&L Goodbody are acting as legal advisors to Perrigo. * On April 8, 2015, Mylan announced that the group has made a proposal to acquire Perrigo in a cash-and-stock transaction that would create a diversified, global pharmaceutical leader with an unmatched commercial and operating platform and a unique, one-of-a-kind profile. Under the terms of the non-binding proposal, which was delivered to Perrigo's Chairman on April 6, 2015 , Perrigo shareholders would receive $205 in a combination of cash and Mylan stock for each Perrigo share, which represents a greater than 25% premium to the Perrigo trading price as of the close of business on Friday, April 3, 2015 (the last trading date prior to the date of Mylan's proposal), a greater than 29% premium to Perrigo's sixty-day average share price and a greater than 28% premium to Perrigo's ninety-day average share price. The proposal is subject to the pre-condition of confirmatory due diligence, which pre-condition may be waived by Mylan at its discretion.
Details: The combination of these complementary businesses would produce a company with critical mass in specialty brands, generics, over-the-counter (OTC) and nutritional products; a powerful commercial platform with reach across all customer channels; an high-quality operating platform; and opportunities to generate enhanced growth and deliver significant immediate and long-term value and benefits for shareholders and the other stakeholders of both companies. In March 2015, Perrigo has completed the acquisition of Belgian-based Omega Pharma Invest in a cash and equity transaction valued at approximately €3.8 billion. Omega Pharma is one of the largest OTC healthcare companies in Europe.
Mylan offers a growing portfolio of around 1,400 generic pharmaceuticals and several brand medications. The group operates one of the largest active pharmaceutical ingredient manufacturers and currently market products in about 145 countries and territories with a workforce of approximately 30,000 people. Mylan expects the combination will result in at least US$800 million of annual pre-tax operational synergies by the end of year four following the consummation of the offer. The synergy estimate was prepared using a sound process and was independently reported on by the Irish firm of PricewaterhouseCoopers and Goldman Sachs International in accordance with the requirements of the Irish Takeover Rules. The transaction is expected to be immediately accretive to EPS on a fully-synergized basis and it is anticipated that substantial free cash flows will drive rapid deleveraging and enhanced reinvestment into the business, with the combined company expected to maintain its investment grade credit profile.
Related: Generics OTC
