Shareholders sue struggling Perrigo for 'misleading' them away from Mylan buy

Since dodging a hostile buyout attempt from generics maker Mylan, Perrigo hasn’t been doing so hot. And some of the company’s shareholders aren’t pleased.

Investors have filed a class action lawsuit in New Jersey, on behalf of shareholders who bought Perrigo’s stock between April 21, 2015 and May 11, 2016, alleging that the Dublin drugmaker's takeover defense was less than accurate.

Perrigo made “false and misleading” statements about its financial condition and growth prospects to persuade shareholders to vote down its suitor’s offer, the lawsuit claims.

Free Daily Newsletter

Like this story? Subscribe to FiercePharma!

Biopharma is a fast-growing world where big ideas come along daily. Our subscribers rely on FiercePharma as their must-read source for the latest news, analysis and data on drugs and the companies that make them. Sign up today to get pharma news and updates delivered to your inbox and read on the go.

Perrigo rejected Mylan’s $205-per-share bid last year, claiming the wannabe acquirer had vastly underrated its value. But since last November, when that offer formally bit the dust with a shareholder vote, Perrigo has watched its CEO jump ship for Valeant, slashed its 2016 earnings guidance, and taken a $185 million charge on its Omega Pharma buyout, which hasn't paid off as quickly as Perrigo had hoped.

The company, for its part, still believes “there's a long runway for growth ahead of us,” new chief John Hendrickson told shareholders in May, and he’s blamed departed skipper Joseph Papa for the troubles that have cropped up since Perrigo sent Mylan packing. Perrigo’s “recent track record of performance against our own expectations is unacceptable,” he told them on a conference call.

And Hendrickson isn't alone in blaming the ex-CEO for Perrigo's problems. Piper Jaffray analyst David Amsellem told Bloomberg the same month that “basically Joe Papa just high-tailed it out of Perrigo, and kind of left the company in shambles.”

There may be a quick way for Perrigo to put its troubles behind it, though. Last month, StreetInsider reported that a U.K.-based company was looking at buying the OTC specialist for $20 billion, citing unnamed sources. Some industry watchers were skeptical of the rumored transaction, though--including Raymond James analyst Elliot Wilbur, who wrote in a note to clients that "all we hear is noise."

Perrigo did not respond to a request for comment by press time. 

- read the release

Special Report: Top 11 Fastest-Growing Generics Companies - Perrigo

Related Articles:
Perrigo up for $20B sale to mystery U.K. buyer: report
Valeant investors fret as new Perrigo CEO slams Papa's performance
It's official: Pearson out, Papa in as Valeant CEO​
Perrigo pushes forward with Ireland expansion as sales, earnings lag
Perrigo to slash 800 jobs, buy back $2B of its stock in move to fend off Mylan
Just wait, Perrigo investor urges. We can get the same return--without a Mylan deal

Suggested Articles

AbbVie is rolling out psoriasis drug Skyrizi after an approval last month, and it's offered Humira discounts in payer negotiations to support the launch,…

Paul McKenzie has become COO of CSL Behring, having left Biogen as it struggles following the failure of its late-stage Alzheimer’s candidate.

With increasing numbers of novel biopharma platforms vying for a voice and money, it's more difficult for investors to assign them proper values.