With Mylan ($MYL) now halfway through its Perrigo ($PRGO) tender offer period, the company tried once again on Tuesday to make its case for shareholders. The multiple it's offering is attractive, Mylan's execs insisted--and that's why no rival bidders have stepped up to top it.
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| Mylan CEO Heather Bresch |
No matter how you slice it, CFO John Sheehan said, the multiple Mylan has put forth to Perrigo investors is in the "top end of the range of what the market has seen." For starters, it beats the one Perrigo itself recently paid for Belgium's Omega Pharma, he said during an investor conference call.
And the way Mylan sees it, that's the "fundamental reason" no white knights have stepped into the picture in the 6 months it's been pursuing its target. Especially considering the chill that's hit stocks in the sector lately, Mylan views its offer as unbeatable.
"The silence is deafening," Sheehan said of the lack of rivals. And if Perrigo is in talks with another bidder? It would be "inexcusable" for the company not to have let its shareholders know by now, he insisted.
There are other reasons to like the proposal, too, Mylan's leaders said. They criticized Perrigo's "Base Plus Plus Plus" strategy, which involves augmenting its business with M&A of its own. Paying premiums to acquire other companies involves more time and more risk than tying up with Mylan, but won't necessarily be more accretive, Sheehan cautioned. And Perrigo's plan to bulk up "simply underscores that the company's organic growth is not robust," Mylan CEO Heather Bresch told listeners.
To the critics who've argued that Mylan, a generics giant, won't be able to get the most out of Perrigo's OTC, store brand-focused business, that's a "far-fetched assertion," Bresch said.
When it comes to consumer health, Mylan can "leverage our unmatched scale" with customers, some of which it shares with Perrigo, she pointed out. As to the business Perrigo picked up from Belgium's Omega, it's a "natural fit" with Mylan's "extensive European platform," she said. And Perrigo's generics--which generate 19% of the company's revenue--are "Mylan's bread and butter."
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| Perrigo CEO Joseph Papa |
"As you can see, when you break Perrigo into its parts, it becomes obvious that it lines up perfectly with and is complementary to Mylan's assets, as well as its core competencies," she said.
But analysts haven't exactly seen it that way. Last month, BMO Capital Markets analyst David Maris wrote to investors that Mylan's lack of experience in the OTC business made Perrigo better off on its own. And last week, Bernstein analyst Ronny Gal added his two cents, writing that, "the more we look at the Mylan-Perrigo transaction, the less we like it."
Mylan's conference call didn't change that for some of them, either. "Following today's event--and with 30 days until tender close--we continue to see lackluster financial/strategic benefits" for Perrigo, Jeffries analyst David Steinberg wrote in a note to clients after the call. "We heard little new" during Mylan's presentation, RBC Capital Markets analyst Randall Stanicky chimed in, noting that he thinks Mylan's "case for a combination falls short on several points."
- view Mylan's presentation
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