Mylan Loses Hostile Bid for Perrigo--Update

By Liz Hoffman And Chelsey Dulaney 

Mylan NV lost its $26 billion hostile bid for Perrigo Co. after a seven-month pursuit, a rare outcome in what shaped up to be one of the most bitter takeover battles in decades.

Mylan said Friday that about 40% of Perrigo's shares were tendered in the offer. It needed at least 50% to take control of its smaller rival. The Wall Street Journal had reported Thursday night that Mylan was set to lose the bid.

The cash-and-stock offer expired Friday morning at 8 a.m., but most institutional investors had to tender by Thursday night to be counted by the national stock clearinghouse known as DTC, the Journal reported.

Shares of Mylan rose 9% to $47.10 a share in premarket trading, while Perrigo shares fell 9.6% to $141.50 a share.

A representative for Perrigo wasn't immediately available for comment.

Mylan has been trying since April to acquire Perrigo, a maker of store-brand versions of cold and allergy medicines. The fight--which briefly involved an unsolicited bid for Mylan by Teva Pharmaceutical Industries Ltd.--came during a year of fevered, at times contentious, deal-making between health-care companies.

There have been $532 billion of health-care takeovers announced in 2015, according to Dealogic, up more than 60% compared with the same period a year earlier.

Mylan's loss will hurt hedge funds that bought big blocks of Perrigo stock in recent months, hoping for a deal. Among the largest Perrigo holders are John Paulson's firm Paulson & Co., which had a roughly $500 million stake, as well as Elliott Management Corp. and Highfields Capital Management LP, which each had more than $300 million invested in the Ireland-based drug maker as of Wednesday, filings show.

Hedge funds with big pharmaceutical holdings have been battered recently, as scrutiny of drug pricing and a broader selloff in biotechnology stocks has made the sector one of the worst-performing of late.

Mylan Chief Executive Robert J. Coury said the company "viewed Perrigo as a unique and exciting opportunity, but not one that was required for the future success of our company."

Perrigo, meanwhile, joins a small club of companies that have successfully beaten back a tender offer on persuasion alone, without traditional corporate defenses. Irish takeover rules give boards of target companies few tools to shield themselves or find a "white knight" buyer, leaving Perrigo at the mercy of shareholders.

Perrigo last month unveiled cost cuts and a share buyback meant to satisfy investors. And the company briefly considered a large deal, including a takeover of Endo International PLC, The Wall Street Journal earlier reported. But as the bid entered its final weeks, Perrigo's board backed a stand-alone strategy that would put the company's fate in the hands of its investors-and in the ability of its chief executive, Joe Papa, to win them over.

Having done so, Perrigo must now confront its independent future. The company is still a target, owing in large part to its Irish domicile, which makes it an attractive tax base for a larger U.S. rival. And it must deliver on the cost cuts it promised investors last month.

Write to Liz Hoffman at [e-mail] and Chelsey Dulaney at [e-mail]

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(END) Dow Jones Newswires

November 13, 2015 09:19 ET (14:19 GMT)

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