Perrigo spurned Mylan's $29B offer, but would a bigger one do?

Perrigo CEO Joseph Papa

Bad news for Mylan ($MYL) if it wants to avoid a $40 billion takeover by generics rival Teva ($TEVA): Its own acquisition prospect, Ireland's Perrigo ($PRGO), isn't interested in getting together.

Late Tuesday, the Dublin drugmaker announced that its board had unanimously rejected Mylan's $29 billion offer, which it put forth earlier this month. The reasons? It "substantially undervalues Perrigo and its growth prospects," for one, according to CEO Joseph Papa.

The way Perrigo sees it, Mylan hasn't taken key factors into account, including its global distribution platform, a pipeline it thinks can net $1 billion in sales through the next three years, and its recent Omega Pharma buyout.

"Perrigo has a long history of driving above-market shareholder value through consistent growth, with a focus on profitability and operational excellence," Papa said in a statement--something he says is reflected in the company's compound annual growth rate goal of 5% to 10%.

The rejection may not shock some industry watchers. As Bloomberg noted last week, Mylan's bid valued Perrigo at 26 times EBITDA. While that's high, it doesn't touch the 30-plus multiples that other suitors have been willing to pony up for their targets since pharma's M&A gold rush began.

That logic is one reason why Mylan might come back with a bigger offer. The other: If Perrigo continues to refuse its advances, Mylan's going to have one less excuse not to tango with Teva. Tuesday morning, after weeks of speculation, the Israeli drugmaker offered $82 per share in cash and stock to buy it.

As for Mylan Chairman Robert Coury's recent claims that the business overlap between the companies would thwart any regulatory clearance, the Israeli drugmaker isn't having it: It "carefully studied" the regulatory aspects of a tie-up, and it's confident it can put together a transaction that passes muster.

"We have long respected Mylan's business, and we are confident that Mylan's board of directors and stockholders will agree that our proposal represents a significantly more attractive alternative for Mylan and its stockholders than Mylan's proposed acquisition of Perrigo," it said in a statement.

- read Perrigo's release

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