Mylan NV shareholders voted Friday in favor of the company’s $35.6 billion bid for Perrigo Co., handing the generic-drug maker ammunition for an attempted hostile takeover of its rival.
The bid won approval from two-thirds of votes cast at a shareholder meeting, Mylan said Friday, adding that it got support from more than a majority of the company’s shares outstanding. It wasn’t more specific on the tally.
Mylan, which simultaneously secured approval for an acquisition of Perrigo and the issuance of shares that will help pay for the deal, said it would launch its offer directly to Perrigo’s shareholders “in the coming weeks.” By doing so, it would bypass Perrigo’s management and board, which have rebuffed its advances.
“Following extensive discussions with our shareholders, we are confident that most of them believe that Mylan’s offer substantially undervalues Perrigo and would dilute our growth profile and superior valuation,” Perrigo said after the vote.
Now it will be up to Perrigo shareholders to decide whether they want the companies to combine.
The outcome is a victory for Mylan Executive Chairman Robert J. Coury, who spurned a roughly $40 billion takeover offer from Teva Pharmaceutical Industries Ltd. that came after Mylan declared its interest in Perrigo. Mylan, which recently moved its legal home to the Netherlands after an acquisition, made use of Dutch corporate law to strengthen its defenses against a deal with Teva.
After Mylan’s rejections, Teva changed course and agreed to buy Allergan PLCs generic-drug business for $40.5 billion.
In April, Mylan made an unsolicited, $28.9 billion bid for Perrigo, arguing that there is a need for consolidation in the crowded generics sector. It later raised its bid to about $33 billion, and then again to nearly $36 billion. Perrigo rejected the bids as too low.
The potential deal has met resistance not just from Perrigo. Proxy adviser Institutional Shareholder Services Inc. recommended earlier this month that Mylan shareholders vote against it. It argued the financial benefits of the deal aren't sufficiently compelling, despite its industrial logic.
At the same time, John Paulson, the founder of hedge fund Paulson & Co., which owns shares in both companies, came out in favor of the deal and publicly extolled its merits. Abbott Laboratories, another big Mylan shareholder, has also declared its support of a Perrigo deal.
Neither Mylan nor Perrigo is a household name, but a combination of the two companies would create one of the world’s top sellers of low-price medicines with about $15 billion in yearly sales.
Mylan and Perrigo generally compete in different segments of the generic-drug business. Mylan is best-known for selling generic prescription drugs, though its top-selling product is the EpiPen emergency treatment for allergic reactions. Perrigo makes over-the-counter cough-and-cold remedies and infant formula for chains such as Wal-Mart Stores Inc. and Walgreens Boots Alliance Inc., which sell the products under their own names.
A deal would be the latest in a wave of consolidation of drug firms seeking to gain scale and remain competitive in an evolving health-care market. There have been $274.8 billion of deals in the pharmaceutical sector world-wide so far this year, by far the biggest total on record, according to Dealogic.
Both Mylan and Perrigo have faced headwinds recently. Mylan has been challenged by competitors undercutting prices in emerging markets, on the one hand, and by larger rivals such as Teva and Allergan, which have historically benefited from lower tax rates, on the other.
Perrigo also shifted its legal base through a so-called tax inversion. Such deals allow companies to move to a lower-tax jurisdiction through an acquisition. Still, Perrigo has faced challenges including low margins on private-label medicines.