Mylan makes a pass at Perrigo with $205-per-share buyout offer

Mylan Chairman Robert Coury

Generics specialist Mylan ($MYL) has zeroed in on the big buyout everyone's been waiting for. The Pittsburgh-based drugmaker offered $205 per share for Perrigo ($PRGO), the over-the-counter drugmaker that just closed its own $4.5 billion deal for Belgium's Omega Pharma.

For Mylan, it could be the acquisition that simultaneously eases pressure from M&A-minded investors and fends off unwanted takeover offers. The company recently closed on its buyout of a broad portfolio of Abbott Laboratories' ($ABT) drug rights, but that wasn't enough to quiet the buy-or-be-bought talk.

It would also give Mylan more heft in a business that relies on economies of scale to deliver profits. The combined company would have produced $15.3 billion in 2014 sales, Mylan says--almost double its own 2014 total of $7.72 billion. And the merger offers "compelling synergies" that could boost margins and earnings, the company says.

Perrigo would bring along the world's largest businesses in store-brand over-the-counter meds, plus the prescription drug royalties it bought along with Elan last year--which included Elan's share of Biogen's ($BIIB) big-selling multiple sclerosis med Tysabri. Then there's the portfolio of some 2,000 OTC drug brands in Europe that came with the Omega deal.

Though Perrigo has obviously been on an acquisition binge, it reportedly started entertaining a sale last year, bringing on an investment bank to scout for buyers willing to pay a 25% premium to its $20 billion market cap at the time. Mylan says its $205-per-share offer offers that 25% premium--but to Perrigo's Friday closing price.

In an offer letter dated Monday, Mylan Chairman Robert Coury referred to past conversations about a Mylan-Perrigo combo, saying the two companies have complementary operations and cultures. The $205-per-share offer, in cash and stock, is "the natural culmination of our prior discussions," Coury states.

"In an environment where scale and reach are becoming increasingly important, the combination of our companies would result in an unmatched global platform, substantial revenue and operating synergies, and enhanced long-term growth potential, all of which would serve to create significant value for the combined company's shareholders and other stakeholders," Coury said.

- read the release from Mylan

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