UPDATED: Mylan shareholders OK hostile run at Perrigo

Mylan's shareholders think it is a dandy idea to continue to pursue a takeover of Perrigo. Two-thirds of those who voted today favored the buyout of the over-the-counter specialist despite the adamant opposition to the deal from Perrigo CEO Joseph Papa and his board.

Mylan Chairman Robert Coury

Mylan ($MYL) has until Sept. 14 to initiate the process for acquiring Perrigo ($PRGO), Bloomberg points out. In a statement after the vote, Mylan Chairman Robert J. Coury said the company would make its "formal offer directly to Perrigo shareholders in the coming weeks, and we are very confident that they too will support this unique and compelling transaction."

That is a lot of confidence, given that Perrigo's management has been highly critical of Mylan and called the proposal "value destructive." In a response today, Papa said he was just as sure that Perrigo shareholders would flatly refuse Mylan's offer. Just days ago Papa told shareholders in a letter that "Mylan's pursuit of Perrigo at all costs has … highlighted some very troubling corporate governance values." He cited the company's move to lower the deal acceptance condition from 80% to 50%, and threats to delist Perrigo shares even if 49% of its investors don't like Mylan's offer. 

The deal is estimated at being worth about $200 a share. Perrigo's shares closed Thursday at $188.19, up 2.41%. The offer as it stands has gotten mixed reviews. A couple of proxy advisors have said they think it would be a good move all the way around, citing Mylan's record for integrating other companies and its ability to cut costs in the process.

But advisor ISS issued a report to clients recommending they vote against the tie-up. It said that while there it might make business sense for Mylan the deal as structured was flawed. It pointed out that by lowering the threshold to 50% increased the risk that Mylan gets stuck as a large shareholder in a public company without a clear path to obtaining the rest.

Perrigo CEO Joseph Papa

Now, it will be up to Perrigo's shareholders to decide what they think and Papa has said repeatedly that he is sure they feel about the deal the way he does, that is a bad idea and that they will do better if Perrigo remains an independent company.

Of course, there is the possibility that a white knight might show up with a better offer, a scenario that Sam Pappas, CEO of Mystic Asset Management, told Investor's Business Daily, he could envision. "It's about building up the pipelines," he said. "And M&A can be an efficient way to do that."

- here's the Mylan statement
- here's the Perrigo statement
- read the Bloomberg story
- more from Investor's Business Daily

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