Perrigo to Cut Jobs, Buy Back Shares to Fend off Mylan Offer

  • Drugmaker to fire 800 and repurchase $2 billion of stock
  • Papa says `irrational' to believe Mylan can run firm better

Perrigo Co. plans to cut 800 jobs and buy back $2 billion of shares to boost shareholder returns as it continues to fend off a hostile takeover bid from Mylan NV.

The reduction in headcount is equivalent to about 6 percent of its global workforce, the company said in a statement on Thursday. Perrigo also promoted John Hendrickson to the position of president, and said that about $500 million in shares will be repurchased in the fourth quarter, boosting earnings by 15 cents a share.

The shares rose 3.1 percent to $160 at 7:26 a.m. in New York trading before the market opened.

The company also on Thursday reported third-quarter financial results. Earnings excluding one-time items of $1.76 a share beat the $1.72 average of analysts’ estimates surveyed by Bloomberg. Sales were $1.34 billion, less than estimates of $1.42 billion.

Chief Executive Officer Joseph Papa has repeatedly rejected Mylan’s $27.1 billion offer to acquire Perrigo, which makes over-the-counter and generic drugs, as inadequate. Mylan took its proposal directly to shareholders on Sept. 14, offering $75 in cash and 2.3 Mylan shares for each Perrigo share. The bid exposes its investors to “significant financial risks” as well as to Mylan’s “troubling corporate governance,” Perrigo said a few days later.

“The actions we are announcing today to drive substantial profit growth make the gross inadequacy of Mylan’s offer clearer than ever,” Papa said in the statement. “It is fundamentally irrational to believe Mylan can run this business better or more profitably than our team."

Nina Devlin, a spokeswoman for Mylan, said the company didn’t have an immediate comment.

Perrigo also forecast that 2016 earnings, excluding some costs, would climb about 20 percent to $9.30 a share, from about $7.75 this year. The company plans to consolidate some operations in Ireland, and will begin a sale process for its U.S. vitamins, minerals and supplements business.

The rest of the share buyback program will be completed over the next 24 to 36 months, the company said.

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