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Friday, 13 November 2015 15:29

Rejection of Mylan’s hostile takeover shows shareholders’ ‘overwhelming endorsement’ of Perrigo’s strategy, CEO says

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Perrigo Chairman and CEO Joe Papa speaks at a press conference in Allegan today. Perrigo Chairman and CEO Joe Papa speaks at a press conference in Allegan today. PHOTO: Joe Boomgaard

ALLEGAN — Shareholders’ rejection of Mylan N.V.’s hostile takeover bid allows executives at Perrigo Co. plc to return their full focus to growing the business.

Perrigo’s shareholders tendered just 39 percent of outstanding shares in the company to Mylan, far short of the more than 50 percent needed to take a majority stake in the Allegan-based producer of over-the-counter medications.

The passing of this morning’s deadline for shareholders to tender their shares ends a battle for control of Perrigo that played out over seven months.

[RELATED: Perrigo fends off hostile takeover bid by Mylan N.V.]

While Perrigo may remain susceptible to future takeover attempts, Chairman and CEO Joe Papa called the outcome a “great day” for the company and an “overwhelming endorsement” of its strategy to grow through acquisitions and new product development. He notes that 80 percent of Perrigo’s long-term shareholders declined to tender their shares to Mylan.

“They believe in the long term. They believe is what we’re accomplishing,” Papa said.

Mylan offered $75 in cash and 2.3 of its shares for every Perrigo share.

As the hostile takeover bid played out since last spring, efforts to fend off Mylan got in the way of potential deals for Perrigo, Papa said. Perrigo now can focus on pursuing new deals to drive growth, Papa said.

“The uncertainty that this has created has caused us some challenges,” Papa said during an interview today at Perrigo’s corporate headquarters in Allegan. “While we were involved in our own situation, it was very difficult to do some of the things that I would have liked to have done. Now that this is removed from us, absolutely, we’ll go back into acquisition mode.”

The hostile takeover attempt caused uncertainty not just for Perrigo but in Allegan and Holland, where the company employs more than 4,000 people and its corporate foundation has contributed more than $8.8 million to charitable causes in the last four years.

In a statement today to MiBiz, Gov. Rick Snyder hailed the outcome as “good news for Michigan.”

“The company is one of our largest employers, and shifting operations to another state would have been a serious blow to Southwest Michigan and a setback for our state as a whole,” Snyder said. “I view the state government as a partner with Perrigo. Over the years, we’ve worked to help the company invest in Michigan and its people, and Perrigo has delivered, producing jobs, investment, growth, revenues and prestige through its expanding global operations.”

In the week prior to the deadline for shareholders to tender their shares, economic developers and other business organizations launched a public campaign to show their support for the company through billboards and a social media campaign using the hashtag #perrigopride.

“We couldn’t be more excited and relieved with this outcome. Perrigo is part of the fabric of West Michigan and we have incredible #perrigopride,” said Nora Balgoyen-Williams, director of the Allegan County Economic Development Commission.

A little more than a week before today’s deadline, Perrigo announced a cost-cutting plan that involves selling off the business unit for vitamins, minerals and supplements; streamlining operations and cutting 6 percent of its workforce globally, or 800 jobs; and buying back $2 billion in shares.

About 450 job cuts will occur in South Carolina where the vitamins, minerals and supplements business is based. The remaining positions will come through attrition and about 250 reductions globally.

About $500 million of the share repurchases, which will commence immediately, will come in the fourth quarter, boosting 2016 earnings by 15 cents per share. The remaining $1.5 billion in share repurchases will occur over the following 24 to 36 months. Altogether, the actions should generate $175 million in benefits to Perrigo, lifting earnings by 38 cents per share to $9.83 in 2016.

Perrigo also will consolidate supply chain and procurement management into a single global center based in Ireland, where the company is domiciled, “to maximize value through the elimination of redundancies and enhancement of purchasing power.”

Read 3750 times Last modified on Sunday, 22 November 2015 18:55

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