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November 02, 2015 Perrigo needs deal to thwart Mylan Madeleine Armstrong Perrigo continues to resist Mylan’s overtures, but a deal is looking increasingly likely after its attempts to block the buy in court failed. Mylan has until November 13 to tempt Perrigo shareholders under Irish takeover rules. An acquisition of its own might now be the only hope for Perrigo in this buy-or-be-bought saga. But, with increasing consolidation in the speciality pharma space, the pool of potential targets is dwindling (see table below). The best option looks like Endo International, though its market cap of nearly $14bn might make it too big a bite for Perrigo, which has just $5bn in cash. But if Perrigo could pull it off it would gain a company with one of the best forecast growth rates in mid-tier pharma. Jazz Pharmaceuticals, Meda or Lundbeck could be easier to digest but the last, with faltering sales, might not be such an attractive proposition. Perrigo and its potential acquisition targets Company Based Market cap ($bn) 2014 sales ($m) 2020e sales ($m) CAGR Perrigo Ireland 23.1 815 1,388 +9% Endo International US 13.6 2,053 5,616 +18% Jazz Pharmaceuticals Ireland 8.4 1,163 2,151 +11 Lundbeck Denmark 5.9 2,222 1,974 -2% Meda Sweden 5.4 1,963 2,519 +4% Last line of defence Perrigo’s chief executive, Joseph Papa, is standing firm but the company’s share price closed down 5% at $157.74 on Friday, well off its 2015 high of $203.69 in April after Mylan formalised its bid (Mylan anti-chain action as good as confirms Teva interest, April 09, 2015). But Mylan’s share price has tumbled too, and the offer is currently equivalent to only around $176 per Perrigo share, made up of 2.3 Mylan shares and $75 in cash – a far cry from when it worth closer to $232 per share in late April. Still, Perrigo investors might be tempted to accept the terms before things get any worse, given the recent troubles in the pharma market – and if they buy Mylan’s claim that its bid has supported Perrigo’s share price. The transaction will go through if over 50% of Perrigo shares are tendered. Perrigo has been doing its bit to bolster the value of its stock, recently announcing a $2bn share buyback, a restructuring that will see it cut around 6% of its workforce and the planned sale of its vitamins, minerals and supplements business. Analysts were generally positive about these moves but Jefferies questioned why the company had not struck a deal of its own already, with analysts writing: “We were of the mind that Perrigo’s best option to ensure Mylan would not prevail would be some form of M&A.” The question is whether Perrigo will do so quickly and whether its current measures will be enough – or whether Mylan will finally get its way. To contact the writer of this story email Madeleine Armstrong in London at [email protected] or follow @medtech_ma on Twitter More from Evaluate Vantage Evaluate HQ 44-(0)20-7377-0800 Evaluate Americas +1-617-573-9450 Evaluate APAC +81-(0)80-1164-4754 © Copyright 2021 Evaluate Ltd..

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