Despite Losing 60% of Stock Value, Perrigo Execs Awarded Big Bonuses for Fending Off Mylan

Despite Losing 60% of Stock Value, Perrigo Execs Awarded Big Bonuses For Fending Off Mylan
March 9, 2016
By Mark Terry, BioSpace.com Breaking News Staff

Apparently Dublin, Ireland-based Perrigo Company plc board members were pleased that their executives fended off a hostile takeover bid by Canonsburg, Penn. and UK-based Mylan N.V. , because they awarded them handsomely for it.

Joe Papa, the company’s chief executive officer, received extra restricted stock in December worth $1.5 million, as well as a $500,000 cash bonus. The company’s Mar. 4 proxy statement said it was awarded for “key contributions related to Mylan’s hostile takeover attempt.”

Judy Brown, the company’s chief financial officer, and Todd Kingman, the company’s general counsel, each received $375,000 in stock awards and the same amount in cash.

Mylan officially announced the acquisition attempt on Sept. 14, 2015, offering a $27.3 billion buyout. Under that offer, Perrigo shareholders would have received $75 in cash and 2.3 Mylan ordinary stock shares for each Perrigo ordinary share. Perrigo would have controlled 40 percent of the company.

On Sept. 17, Perrigo’s board of directors unanimously rejected the offer. It also filed a Schedule 14D-9 with the U.S. Securities and Exchange Commission (SEC) and the Tel Aviv Stock Exchange (TASE) explaining their reasons for turning down the offer.

In a letter to shareholders, Perrigo stated, “Our Board of Directors has repeatedly rejected Mylan’s offer because it substantially undervalues our Company and does not adequately compensate shareholders for our exceptional standalone growth prospects. Our standalone strategy has rewarded Perrigo shareholders with a Total Shareholder Return of over 970 percent since 2007, which we have achieved through a balanced contribution of organic and inorganic growth.”

In efforts to fend off the attempt, Perrigo consolidated its global supply chain, operations and procurement management activities into a single global center of excellence in Ireland. It also made plans to streamline its organizational structure and cut redundant administrative functions. These efforts were expected to save $35 million annually.

The company also made plans to refine its portfolio, selling off its U.S. Vitamins, Minerals and Supplements (VMS) business. It also planned to cut 800 jobs, or about 6 percent of its global workforce.

Rebuffed by Perrigo, Mylan turned its attention to acquiring Swedish company Meda for a deal worth $7.2 billion. The combined companies would operate in more than 165 countries and have more than 2,000 products. Mylan is best known for the EpiPen, an epinephrine injection to treat severe allergic reactions.

Shareholders and investors reacted negatively to the deal, sending stock prices plummeting 18 percent to $41.42. Analysts indicated that what they didn’t like about the deal was the price.

“It’s a pretty sizable premium they’re paying,” said Jeffrey Loo, a health care equity research analyst at S&P Global Market Intelligence to USA Today. “The growth rate for Meda is not that exciting.”

“Investors are saying they don’t want $7 billion taken out of (Mylan’s) coffers,” said David Dawley, director of the Robbins Center for Global Business and Strategy at West Virginia University, to USA Today.

Mylan is currently trading at $45.10. Shares traded for $58.61 on Nov. 28, 2015.

Perrigo . The company’s 52-week high was $215.73, with a 52-week low of $122.62.

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