Proxy adviser ISS slams Mylan's Perrigo bid, flagging 'unreasonable uncertainties'

On Wednesday, a pair of proxy advisers recommended that Mylan ($MYL) shareholders support the company's quest to bag Irish target Perrigo ($PRGO). But not ISS.

The firm Friday issued a report to clients recommending they vote against the tie-up at a special shareholder meeting later this month, citing "unreasonable uncertainties" surrounding the deal--such as the possibility that Perrigo's shareholders spurn the offer, The Wall Street Journal reports. Mylan's bid is right now worth just under $200 per share, which "could be inadequate to win over enough Perrigo shareholders to complete the acquisition," ISS said.

Mylan Thursday said it would close a tender offer after nabbing more than 50% of Perrigo shares--a threshold much lower than the 80% it was initially targeting. The way ISS sees it, though, the move increases the risk that Mylan gets stuck as a large shareholder in a public company without a clear path to obtaining the rest.

"The transaction Mylan envisions may indeed be a solid business strategy. What it has asked shareholders to approve at this meeting, however, is not a compelling acquisition strategy," ISS wrote, as quoted by the Journal.

Mylan Chairman Robert Coury

Mylan, though, disagrees, as do Glass Lewis and Egan-Jones--fellow proxy advisory firms that praised Mylan's integration track record, culture and cost-cutting opportunities in their own favorable recommendations earlier this week.

"ISS fails to comprehend the potential for medium and long-term value creation for Mylan shareholders, the compelling synergy opportunity, the potential for meaningful multiple expansion and the ability to take advantage of the continuing consolidation in our industry," Mylan Chairman Robert Coury said in a Friday statement.

Meanwhile, Perrigo is busy campaigning against a Mylan takeover to shareholders of both companies in advance of the Aug. 28 meeting, and it's confident its shareholders won't tender into the transaction "at any threshold."

Perrigo CEO Joseph Papa

"This scare tactic is simply an attempt to coerce Perrigo shareholders into a value destructive deal," CEO Joseph Papa said in a statement on Thursday following Mylan's move. "… We are confident that there is no rational path to a full acquisition of Perrigo."

- get more from The Wall Street Journal (sub. req.)
- see Mylan's response
- read Perrigo's comments

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