Irish over-the-counter drug company Perrigo has filed a lawsuit against suitor Mylan in a Manhattan court.
The legal action comes as Perrigo urged its shareholders to reject Mylan’s unsolicited $27 billion tender offer, saying it substantially undervalued the company.
Mylan first proposed to buy Perrigo in April and, after being repeatedly rebuffed, launched a tender offer last Monday.
It has said it would take control if more than 50 per cent of Perrigo shares are tendered in the offer. That strategy is possible under takeover law in Ireland, where Perrigo has been incorporated since buying Irish drugmaker Elan in 2013.
Perrigo’s lawsuit seeks an injunction to block the closing of any tender offer unless Mylan corrects its alleged misleading statements to Perrigo shareholders about a potential merger.
The lawsuit said Mylan overstated potential synergies, and falsely claimed power to delist Perrigo shares in an effort to strong-arm Perrigo shareholders into accepting the tender offer.
Mylan, in a statement, said the lawsuit had no merit and was “an attempt by Perrigo to further frustrate the tender process and to prevent their shareholders from tendering to Mylan in support of this compelling, value creating transaction.”
Netherlands-based Mylan has offered $75 in cash and 2.3 of its shares for each Perrigo share, a combination now worth $188.55 based on Mylan’s Thursday closing price of $49.37. Perrigo shares closed down $1.31 at $181.08 on Thursday.
Joe Papa, Perrigo's chief executive, said he does not believe his company's shareholders will agree to swap their shares for Mylan shares, and that the deal premium of 13 per cent was lower than in other pharmaceutical takeovers.
“I cancelled vacations this summer and I plan to spend more times with shareholders over the next 60 or so days to make sure they understand this is a bad deal,” Mr Papa said.
Perrigo shareholders have until November 13th to take part in the tender offer. Shareholders often wait until near the closing date before deciding to participate, so it is unclear if Mylan will succeed.
Buying Perrigo would give Mylan over-the-counter consumer and nutritional products and a line of generic topical medicines.
A takeover would be the latest in a string of recent multibillion-dollar pharmaceutical deals, including Valeant Pharmaceuticals’s $11 billion acquisition of Salix Pharmaceuticals and AbbVie’s $21 billion offer for Pharmacyclics. – Reuters
