Perrigo to slash 800 jobs, buy back $2B of its stock in move to fend off Mylan

Perrigo CEO Joseph Papa

Some industry watchers have predicted that Perrigo would make shareholder-friendly moves to persuade investors not to accept Mylan's hostile tender offer. And now--leading with job and cost cuts--the Dublin drugmaker is doing just that.

Perrigo ($PRGO) will cut loose 800 workers, or about 6% of its global headcount, it said Thursday. It'll also consolidate its Irish operations into one center, in a move it says will eliminate overlaps and enhance its purchasing power.

That's not all, though. Perrigo plans to pare down its organizational structure to cut out redundancies there, too, aiming for $35 million in annual savings. It's looking to sell its U.S. vitamins, minerals and supplements business for another $35 million a year. And finally, it's kicking off a $2 billion share buyback plan, $500 million of it by the end of this year.

It's a familiar takeover-fighting strategy, with Allergan ($AGN) as pharma's most recent example. Last July, the company announced 1,500 job cuts as part of a plan to lure shareholders away from predator Valeant's ($VRX) clutches. Analysts well know the end of that story, though--a white-knight swoop-in from Actavis--and many want to know whether defensive M&A could be in the cards for Perrigo, too.

To that, CEO Joseph Papa said "there's clearly some opportunities there." He's fielded some phone calls from interested companies, he said, and Irish takeover law "can't prevent anyone from approaching" Perrigo. But he stood by his belief that Thursday's restructuring plans would be Perrigo's best step forward.

The same goes for making its own pickups, he said. Just because Mylan ($MYL) "has put a bad deal on the table, we do not want to enter into a second bad deal," he told investors. "… We want to be smart and think through the situation in front of us."

Perrigo CFO Judy Brown

Perrigo also devoted time on its Q3 call to slamming Mylan's offer and picking apart many of its claims--including the potential it sees for $800 million in annual cost cuts. There is "virtually no alignment within our businesses" that could yield such a tally, CFO Judy Brown told listeners, noting that only 6 of Mylan's APIs could be used to produce Perrigo's products.

"When you think about what an OTC company uses, they just don't make it," Papa added. For Mylan to suggest that there's potential significant vertical integration "is a joke, with all due respect."

- read Perrigo's release

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