Mylan NV went forward with a hostile $31.2 billion bid for fellow drugmaker Perrigo Co., opting to take its offer directly to shareholders rather than accept a separate takeover proposal from Teva Pharmaceutical Industries Ltd.
The tender offer would exchange $60 in cash and 2.2 Mylan shares for each share of Perrigo, according to a statement. That amounts to $222.12 a share based on Mylan’s closing price Thursday -- 10 percent above the price of Perrigo’s stock the same day.
Perrigo rejected the new offer, arguing it’s not as high as it seems because Mylan’s stock has been inflated by Teva’s takeover offer. Based on Mylan’s share price of $55.31 on March 10, the new offer would be $181.67 a share. Perrigo had rejected Mylan’s earlier proposal of $205 a share, saying it didn’t reflect the value of its growth prospects.
The Perrigo deal would be Mylan’s biggest yet and could help the company avoid getting bought by Teva. The Israeli drugmaker had proposed a $40.1 billion takeover earlier this week, saying the offer was good as long as Mylan dropped its bid for Perrigo.
Even before that offer from Teva, Mylan had said the companies were a poor cultural fit and had too many overlapping businesses. Perrigo, on the other hand, has complementary products and regional assets, Mylan has said.
“While we are disappointed by the decision of the Perrigo board to reject our proposal without entering into discussions thus far, we are still hopeful and confident that we can engage with their board about our offer and how to best bring our organizations together,” Mylan Chairman Robert Coury said in a statement.
A Perrigo spokesman said the company had no comment. Teva reiterated its offer for Mylan in a statement, saying it remains committed to completing a deal.
Unlike Mylan’s earlier proposal in a statement, the offer made Friday was binding under takeover rules in Ireland, where Perrigo is domiciled for tax purposes. Perrigo told shareholders they are strongly advised to take no action on Mylan’s offer.
Mylan rose 3.6 percent to $76.31 at 12:13 p.m. in New York. Perrigo fell 3.3 percent to $195.
While Mylan gets most of its sales from generic drugs, about half of Perrigo’s $4.06 billion in revenue last year came from its consumer health-care division, including store-brand versions of popular over-the-counter medicine like Sudafed and NyQuil, sold in retailers such as Wal-Mart and Walgreens.
Both companies have done deals to move their tax domiciles outside the U.S. to cut costs. Mylan acquired Abbott Laboratories’ European assets last year, and Perrigo bought Dublin-based Elan Corp. in 2013.
The love triangle developing between Teva, Mylan and Perrigo is adding to what has already been a record period for mergers and acquisitions in the pharmaceutical industry. Generic-drug makers announced or completed more than $100 billion in deals last year, five times more than any year since 2005. Actavis Plc agreed to buy Botox maker Allergan Inc. for $65 billion in the biggest deal last year.
Mylan is seeking to cement a deal amid speculation that Perrigo could draw interest from other suitors, such as Johnson & Johnson and AmerisourceBergen Corp.
Perrigo is “an attractive asset in a rapidly consolidating space,” Chris Schott, an analyst at JPMorgan Chase & Co., said in a note Wednesday. Schott rates the stock as overweight.
Heather Bresch, chief executive officer of Mylan, has been vocal about her ambition to expand the company. Lower tax rates give her financial flexibility to “do some pretty sizable deals,” Bresch said in an interview in January.