Mylan Bid for Perrigo May Make Both Drugmakers Targets: Real M&A
2015-04-09 17:08:23.618 GMT
By Tara Lachapelle
(Bloomberg) -- Mylan NV’s $28.9 billion bid for Perrigo Co.
could end up putting both companies in play.
Mylan’s April 6 offer for Perrigo came less than a week
after the company implemented its own provision to defend
against an unwanted takeover. Since then, analysts have said
that $33 billion Mylan would be a nice fit for Teva
Pharmaceutical Industries Ltd. Teva needs to offset an impending
drop in earnings when cheaper copies of its top drug hit the
market.
Mylan could avoid getting bought by Teva or another
drugmaker if it if can strike a deal with Perrigo -- yet so far
its offer may be short of what’s needed, which could draw in
competitors for a deal.
Mylan’s bid values Perrigo at 26 times earnings before
interest, taxes, depreciation and amortization. While that’s a
rich multiple, it’s lower than the 30-plus-times Ebitda other
drug industry buyers have been willing to pay during a record
period of takeovers, according to data compiled by Bloomberg.
“The most interesting thing about this deal is that shares
of the buyer and seller -- and all the associated companies --
have gone up, which means the valuation isn’t at a level where
people are concerned yet,” said Ronny Gal, an analyst with
Sanford C. Bernstein & Co.
Since the offer was disclosed Wednesday, Mylan has risen 20
percent, almost as much as Perrigo. Teva also climbed.
“I think what happens next is the board of Teva will meet
and decide whether they want to enter the fray,” Gal said.
Other Suitors
Regardless of what Teva decides to do, there still could be
other suitors for Perrigo. Gal says it’s possible that Johnson &
Johnson, which also sells to drug stores, or health-products
distributor AmerisourceBergen Corp. could take a look. While
Pfizer Inc. and Actavis Plc are busy trying to close other
purchases, they can’t be ruled out. And don’t forget about deal-
hungry Valeant Pharmaceuticals International Inc.
With its tax-advantaged structure, Valeant could probably
afford to make the biggest offer, according to Albert Fried &
Co.’s Sachin Shah. Shah says there’s also a chance that Perrigo
turns the tables and tries to buy Mylan or finds another target.
Teva, valued at $58 billion, has entertained a large deal
for a generic drugmaker but doesn’t want to overpay, according
to a person familiar with the matter who asked not to be
identified because the strategy is private. The person said Teva
Chief Executive Officer Erez Vigodman is more interested in
smaller deals that get the company into countries where it
doesn’t have a big generic-drug business, or give it new brand-
name neurology and respiratory products.
Representatives for Teva, Pfizer, Mylan and Valeant
declined to comment. Representatives for J&J, AmerisourceBergen
and Actavis didn’t immediately respond to requests for comment.
Perrigo said in a statement Wednesday that its board “will
meet to discuss the proposal and a further announcement will be
made when appropriate.”
For Related News and Information:
Teva Mulls Next Move as Mylan’s Perrigo Bid Jolts Drugmakers
Mylan Offers to Buy Drugmaker Perrigo for $28.9 Billion
Teva Set to Resume Deals After Investors Reward Rivals: Real M&A
Real M&A columns: NI REALMNA <GO>
Top deal stories: DTOP <GO>
Merger Calculator: MRGC <GO>
To contact the reporter on this story:
Tara Lachapelle in New York at +1-212-617-8911 or
tlachapelle@bloomberg.net
To contact the editors responsible for this story:
Beth Williams at +1-212-617-2307 or
bewilliams@bloomberg.net;
Crayton Harrison at +1-212-617-6145 or
tharrison5@bloomberg.net
Drew Armstrong, Elizabeth Wollman
2015-04-09 17:08:23.618 GMT
By Tara Lachapelle
(Bloomberg) -- Mylan NV’s $28.9 billion bid for Perrigo Co.
could end up putting both companies in play.
Mylan’s April 6 offer for Perrigo came less than a week
after the company implemented its own provision to defend
against an unwanted takeover. Since then, analysts have said
that $33 billion Mylan would be a nice fit for Teva
Pharmaceutical Industries Ltd. Teva needs to offset an impending
drop in earnings when cheaper copies of its top drug hit the
market.
Mylan could avoid getting bought by Teva or another
drugmaker if it if can strike a deal with Perrigo -- yet so far
its offer may be short of what’s needed, which could draw in
competitors for a deal.
Mylan’s bid values Perrigo at 26 times earnings before
interest, taxes, depreciation and amortization. While that’s a
rich multiple, it’s lower than the 30-plus-times Ebitda other
drug industry buyers have been willing to pay during a record
period of takeovers, according to data compiled by Bloomberg.
“The most interesting thing about this deal is that shares
of the buyer and seller -- and all the associated companies --
have gone up, which means the valuation isn’t at a level where
people are concerned yet,” said Ronny Gal, an analyst with
Sanford C. Bernstein & Co.
Since the offer was disclosed Wednesday, Mylan has risen 20
percent, almost as much as Perrigo. Teva also climbed.
“I think what happens next is the board of Teva will meet
and decide whether they want to enter the fray,” Gal said.
Other Suitors
Regardless of what Teva decides to do, there still could be
other suitors for Perrigo. Gal says it’s possible that Johnson &
Johnson, which also sells to drug stores, or health-products
distributor AmerisourceBergen Corp. could take a look. While
Pfizer Inc. and Actavis Plc are busy trying to close other
purchases, they can’t be ruled out. And don’t forget about deal-
hungry Valeant Pharmaceuticals International Inc.
With its tax-advantaged structure, Valeant could probably
afford to make the biggest offer, according to Albert Fried &
Co.’s Sachin Shah. Shah says there’s also a chance that Perrigo
turns the tables and tries to buy Mylan or finds another target.
Teva, valued at $58 billion, has entertained a large deal
for a generic drugmaker but doesn’t want to overpay, according
to a person familiar with the matter who asked not to be
identified because the strategy is private. The person said Teva
Chief Executive Officer Erez Vigodman is more interested in
smaller deals that get the company into countries where it
doesn’t have a big generic-drug business, or give it new brand-
name neurology and respiratory products.
Representatives for Teva, Pfizer, Mylan and Valeant
declined to comment. Representatives for J&J, AmerisourceBergen
and Actavis didn’t immediately respond to requests for comment.
Perrigo said in a statement Wednesday that its board “will
meet to discuss the proposal and a further announcement will be
made when appropriate.”
For Related News and Information:
Teva Mulls Next Move as Mylan’s Perrigo Bid Jolts Drugmakers
Mylan Offers to Buy Drugmaker Perrigo for $28.9 Billion
Teva Set to Resume Deals After Investors Reward Rivals: Real M&A
Real M&A columns: NI REALMNA <GO>
Top deal stories: DTOP <GO>
Merger Calculator: MRGC <GO>
To contact the reporter on this story:
Tara Lachapelle in New York at +1-212-617-8911 or
tlachapelle@bloomberg.net
To contact the editors responsible for this story:
Beth Williams at +1-212-617-2307 or
bewilliams@bloomberg.net;
Crayton Harrison at +1-212-617-6145 or
tharrison5@bloomberg.net
Drew Armstrong, Elizabeth Wollman