3. Buyer: Perrigo
Target: Elan
Price: $8.6 billion

From its back-woodsy home in Allegan, MI, Perrigo ($PRGO) seemed like an unlikely candidate to be pulling off one of the biggest M&A deals of the year. Its reputation was made by cranking out cheap store-brand generics, infant formula and digestive supplements. With an estimated $10 billion in branded products potentially going OTC within years, it was well positioned for even more growth.

While its $8.6 billion deal to buy Elan is far beyond anything it has done before, Perrigo is no stranger to M&A. It has used buyouts to make forays into other areas and other countries including Israel, Mexico, Australia and the United Kingdom. It got both generic product and active pharmaceutical ingredient manufacturing capabilities with its $850 million buyout of Israel-based Agis Industries in 2005.

With the cash-and-stock buyout of Elan, Perrigo CEO Joseph Papa picked an unusual target. After selling rights to its blockbuster multiple sclerosis drug Tysabri to partner Biogen Idec ($BIIB), Elan had a boatload of cash and a royalty stream but no products. What it did have that appealed to Papa was an Irish domicile that should cut the drugmaker's tax rate in half. He also said the company can use the Tysabri royalty stream to expand further. Elan's European infrastructure provides Perrigo entré into that continent and can serve as a launching pad to others, where Papa says he intends to take its model of "quality, affordable healthcare."

For more:
Special Reports: Top 11 Fastest-Growing Generics Companies - Perrigo | Top Pharma Companies by 2012 Revenues
OTC specialist Perrigo nabs Elan and its tax rate for $8.6B
Fast-growing generics maker Perrigo moves into pet care
Perrigo nails down dermatology spot with $45M deal

-- Eric Palmer (email | Twitter)