Perrigo's fate is in shareholders' hands, Mylan chairman says. Or is it?

Mylan Chairman Robert Coury

With the go-ahead from its own shareholders, Mylan ($MYL) is now pushing full steam ahead to acquire Perrigo ($PRGO)--and as Chairman Robert Coury wrote in a Tuesday letter to its Irish target's CEO, "you and your board are now unable to stop the combination."

Mylan, whose investors voted recently to push forward with the hostile tie-up, will next week launch its formal offer to acquire Perrigo shares, paying $75 in cash and 2.3 Mylan shares for each. And at that point, the fate of the OTC specialist will rest in the hands of its shareholders, who will have to decide whether to take Mylan up on its offer.

"At this point, Perrigo's management has no role to play in the process," Coury stressed in the letter to Perrigo chief Joseph Papa.

Coury, for one, is confident Perrigo's investors will see things the way Mylan does. Aside from Mylan's offer posing a "very attractive" option, it's also been protecting Perrigo's stock from "the recent sell-off in the markets," he wrote. So if the transaction doesn't go through, he figures, Perrigo shareholders will "potentially experience an approximate $30 per share drop in the value of their portfolio, and lose the opportunity to receive $75 per share in cash."

Perrigo CEO Joseph Papa

Papa, on the other hand, has expressed confidence more than once that Perrigo's shareholders will reject the offer, and some analysts think that's the way to go. Bernstein analyst Ronny Gal, for one, wrote in a Tuesday note to clients that the deal has "weak financial rationale" with "stretched" cost-cutting potential and revenue synergies that are "unlikely to materialize."

But that doesn't mean Perrigo shareholders won't take it up. "The acquisition may still go through simply due to the ability of near-term oriented investors to dominate the count," he wrote.

Perrigo's move, if it wants to prevent that from happening? Make its own offer, Gal suggests. "If Perrigo can offer a reasonable value enhancing alternative, it will likely convince enough investors (including some hedge funds and dual-stock holders) not to tender in their shares," he wrote. "We think it behooves Perrigo management to do just that."

- read Mylan's release

Special Reports: Top 10 generics makers by 2012 revenue - Mylan | Pharma's top 10 M&A deals of 2014 - Mylan/Abbott Laboratories established products

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