Published in Economic Development
Perrigo Chairman & CEO Joe Papa. Perrigo Chairman & CEO Joe Papa.

Perrigo spent $100M to fight off Mylan’s hostile takeover

BY Sunday, March 06, 2016 02:49pm

ALLEGAN — Fighting off a hostile takeover bid cost Perrigo Co. plc $100 million last year, driving up administrative expenses sharply for the producer of over-the-counter medications.

The majority of that cost, $86.9 million, came in the second half of the year, as Perrigo was working aggressively to fend off Netherlands-based Mylan NV’s $26 billion takeover bid.

Perrigo reported the cost of the takeover battle in a recent quarterly filing with the U.S. Securities and Exchange Commission. The company recorded the takeover defense costs as part of $309.1 million in administration expenses incurred during the last six months of 2015. 

A footnote in Perrigo’s fourth quarter earnings release attributed $71.3 million of Perrigo’s administration expenses in the October-to-December period to “Mylan defense-related fees.” Perrigo recorded another $15.6 million for the same reason in the third quarter. 

Overall, the Mylan fight cost Perrigo $100.3 million during 2015.

The legal fees and other writedowns related to acquisitions pushed down Perrigo’s 2015 financial results.  The OTC drugmaker reported a net loss of $32.8 million in 2015 on record sales of $5.35 billion, up 28 percent from 2014. The results included impairment charges of $216.6 million related primarily to the company’s Omega Pharma NV acquisition and its India API business.  

Excluding non-recurring charges, Perrigo reported adjusted net income of $1.09 billion in 2015, a 29-percent increase over the $827 million it posted in 2014. 

After Perrigo executives and directors repeatedly rejected offers in the prior months, Mylan in September 2015 formally launched a hostile takeover bid. The effort failed when just 39 percent of Perrigo shareholders — far short of the 50 percent needed — tendered their shares to Mylan, which is domiciled in the Netherlands but operated from the Pittsburgh area.

Chairman and CEO Joe Papa, who led the aggressive charge to fend off Mylan’s bid, at the time called the result an “overwhelming endorsement” by shareholders of Perrigo’s strategy to grow through acquisitions and new product development.

The hostile takeover fight has taken its toll on Perrigo’s share price, which spiked from about $165 in April to more than $200 per share shortly after Mylan made its first offer to acquire the company. The share price then fell back to about $152 by late October before dipping below $146 the day Mylan announced its hostile bid had failed.

After Perrigo released its fourth quarter earnings on Feb. 18, the company’s share price dipped again, and has been trading below $130 per share. 

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