ISS Affirms Perrigo's Position That Proposed Mylan Transaction Would Be Value Destructive

Perrigo Company plc ("Perrigo")

today announced that Institutional Shareholder Services ("ISS"), the leading independent proxy advisory firm, recommended that Mylan NV ("Mylan")

shareholders vote "AGAINST" the unsolicited offer to acquire all of the outstanding shares of Perrigo for $75.00 per share in cash and 2.3 Mylan ordinary shares for each ordinary Perrigo share. Perrigo Company. The ISS report states, "Approving this proposal requires too heavy a belief that the 'real' synergistic opportunity is much greater than Mylan has been able to demonstrate, that these synergistic opportunities will be realized much more quickly than Mylan has been willing to say, that the acquisition can be completed at a price even Mylan appears to have signaled is unlikely to win over the requisite 80% of Perrigo shareholders, and that an acquisition will be completed much more quickly and smoothly than the structural issues suggest is likely." The report concludes, "Given that the only certainty, for Mylan shareholders, is that in approving this proposal they would sign up for significant dilution – but have almost no subsequent leverage to drive an optimal outcome, despite the many uncertainties to the rest of the process – support for the proposal is not warranted." In its report, ISS delineates a number of specific criticisms against the proposed transaction: On accretion/dilution, "Both a contribution and ROIC analysis indicate that the transaction is barely profitable for Mylan shareholders by year four." On synergies, "$800 million is apparently the best case for synergies that Mylan could demonstrate …by management's own prognosis, those synergies will not turn this hugely dilutive deal accretive until year four…shareholders might prudently ask themselves why even the best case scenario a management team can demonstrate will still require more than three years to become accretive." On leverage, "The transaction would substantially increase leverage at Mylan. Net debt/ 2015 EBITDA would increase from the current 2.9x to 5.3x after closing of the transaction." On governance, "Mylan may actually trade at a larger discount (and thus lower multiple) due to investors' more dim view of its corporate governance." Commenting on the ISS report, Perrigo Chairman, President and CEO Joseph C. Papa stated, "The ISS recommendation is consistent with our view that Mylan's offer would be value destructive and that Perrigo and Mylan holders alike should not support this transaction. As we have said since April, Mylan's offer substantially undervalues Perrigo and is not in the best interests of our shareholders. Following Mylan's action to recklessly lower the acceptance threshold, which makes an already value destructive deal even worse, this transaction exposes shareholders to dilution, enhanced risk and a questionable synergy target." Papa continued, "The report also underscores Mylan's poor corporate governance track record. Ultimately, we do not believe that Perrigo shareholders will tender into this transaction — whether at 80% or 50% -- and ISS's recommendation only further reinforces our view that Mylan's approach demonstrates an act of desperation as there is no rational path to a full acquisition of Perrigo." Papa concluded, "As our recent accretive acquisitions of a number of well-established European OTC brands demonstrate, we continue to execute on our standalone 'Base Plus Plus Plus' strategy. Perrigo's experienced management team has an outstanding record for creating value, and I believe that Perrigo is well positioned to continue generating superior shareholder returns."