Mylan fails in hostile quest to buy Perrigo

Perrigo CEO Joseph Papa

Pharma's longest-running takeover battle of the year has come to an end--and not in pursuer Mylan's ($MYL) favor.

The company has failed to garner the support necessary for a takeover of Perrigo ($PRGO), a target it's been pursuing since April. As of 8 a.m. Friday, about 40% of Perrigo's shares had been tendered, Mylan said, missing the 50% threshold necessary for it to push forward with the transaction.

Any tendered shares will be returned to Perrigo shareholders, Mylan said.

Perrigo--which has attacked Mylan's values and corporate governance structure throughout the process--celebrated Friday even as shares sank, with CEO Joseph Papa remarking in a statement that he was "delighted" shareholders had "voiced their clear support for this management team and our long-term strategy."

Mylan Chairman Robert Coury

On the flip side, Robert Coury, chairman of the generics giant, downplayed the loss, pointing out in a statement that "Mylan viewed Perrigo as a unique and exciting opportunity, but not one that was required for the future success of our company."

And some analysts--many of whom never loved the idea of a tie-up between the two drugmakers--agree. Bernstein analyst Ronny Gal, for one, wrote in a Friday note to clients that missing out on the Dublin pharma is "a good thing for Mylan."

"We believe Mylan was overpaying for Perrigo and the long-term value of the merger was suspect, in our view," he said.

The way he sees it, the end of the Perrigo effort will free up both financial resources and execs' attention for "more value-creating avenues"--such as a share buyback or another deal, potentially for Sanofi's ($SNY) newly on-the-block generics business or Pfizer's ($PFE) generic business, if it goes up for sale. Both of those options come along with "lower risk and likely better returns, in our view," he wrote.

As for Perrigo, it has its work cut out for it. As part of its efforts to fend off the generics giant, it last month announced plans to slash 800 jobs and kick-start a $2 billion share buyback program.

"Now that the Mylan tender offer is behind us, we look forward to continuing to create significant value for our shareholders," Papa said. "Our confidence in Perrigo's compelling near- and longer-term growth prospects and our steadfast commitment to delivering returns to shareholders remain unchanged."

- read Mylan's release
- read Perrigo's statement

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