When Mylan ($MYL) offered to buy Perrigo ($PRGO) for $205 per share last Wednesday, the brewing $29 billion bid was hailed as the giant generics deal Wall Street has been anticipating. But this deal has an animal health angle too: If Mylan pulls it off, the acquisition will mark its entry into the veterinary market.
Perrigo markets several products in animal health, including the Sentry and Sergeant's Green line of flea-and-tick fighters. Perrigo acquired Sergeant's in 2012 for $285 million, also picking up a joint-health supplement for dogs and a calming collar for cats, among other products.
In 2013, Perrigo bought Velcera for $160 million, an acquisition which brought it the PetArmor line of flea-and-tick products.
But Mylan will have some work to do if it's to improve Perrigo's competitive position in animal health. On February 5, Perrigo announced that fiscal second-quarter sales in its animal division were disappointing. All told, the company suffered a $30 million decline in sales of existing products, most of which were in its contract-manufacturing and animal-health divisions.
Still, it's no surprise that Mylan is making an acquisition play that includes animal health products. Dealmaking in this industry has been on a roll this year, with Eli Lilly ($LLY) closing its $5.4 billion acquisition of Novartis ($NVS) Animal Health in January, for example, and AmeriSource Bergen ($ABC) handing over $2.5 billion for MWI Veterinary Supply shortly thereafter.
For Mylan, acquiring Perrigo could do much more than bring it into a lucrative new industry. Mylan has itself been the talk of buyout rumors for months, and days before its Perrigo bid it adopted a poison pill to fend off hostile takeovers. The Perrigo deal gives Mylan considerably more heft: The combined companies had $15.3 billion in 2014 sales--almost twice what Mylan pulled in on its own.
- here's Mylan's press release on the proposed deal