Corporate Governance Prison – The Mylan – Perrigo Saga

The Mylan – Perrigo saga continues.  Friday marks the expiration of Mylan NV’s $26 billion dollar tender offer for Perrigo.   The saga began on April 8 when Mylan announced its bid which Perrigo’s board rejected.  Since that time, Mylan has raised its bid twice and has now announced the tender offer.   This is a fascinating tale combining mergers, inversions, hostile takeovers, takeover defenses, differing takeover laws and differing forms of corporate governance.   

Simply put, Perrigo is shareholder friendly while Mylan is stakeholder friendly.  To be fair, Perrigo didn’t have much choice but be shareholder friendly.  Irish law limits anti-takeover defenses so the company doesn’t have the options available to Mylan, now headquartered in the Netherlands.  

The stakeholder viewpoint allows Mylan to ignore what is in their shareholders best interest - putting those shareholders in what Perrigo has called a “corporate governance prison’.  Indeed, when Mylan itself was a target of Teva Pharmaceuticals, it used the stakeholder argument in its defense.  Now,  in a hostile deal, Mylan is bidding  stock and cash deal offering 2.3 of its own shares plus $75 in cash for each Perrigo share.  

In response to the ‘governance prison’ charge, Mylan has promised governance reforms if the deal goes through.  Don’t count on it.   If I were tendering, I be exchanging those Mylan shares for cash immediately, putting the funds into hands I know are shareholder friendly – my own.

For more on this saga see our most recent post which has links to some of the others.  Part of that post is reproduced below.

All the best,

Ralph  

September 17, 2015

Mylan, Perrigo and the Power of the Board

We've written before about Mylan and takeovers (e.g., Shareholder Centric or Stakeholder Centric and Offense and Defense in the Drug Industry).  This weeks Wall Street Journal contains an excellent article by Ron Barusch updating the Mylan story.  It presents a very interesting contrast between the takeover laws of Ireland, the Netherlands (where we teach the Acquisition Finance Course) and the US.  The facts below are taken from the article.

Mylan is attempting to take over Perrigo in a hostile deal.  Under Irish law, the directors of Perrigo can express their feelings about the deal, but must let shareholders decide on its merits.  If the deal fails, Mylan would have to wait a year before attempting another deal.  But the key is that shareholders - the owners of the firm, decide.

Contrast that with the situation of Mylan itself.  Mylan ..... the rest of that post can be found here.