1 Challenge Bank Of America Sees For Mylan And Perrigo

Bank of America commented on Mylan NV MYL Wednesday and maintained a Buy rating with a $69 price target.

Analysts led by Sumant S. Kulkarni noted that it would take some time to work through the financial and valuation implications of Mylan’s proposed offer to acquire Perrigo Company plc Ordinary Shares PRGO for $205 per share in cash and stock.

Overall, however, the deal was “conceptually appealing” to the analysts.

The one are that was highlighted as a challenge was the integration of Perrigo’s complex supply chain.

The analysts believed the challenges were not insurmountable for Mylan and that the company’s “prior transactions have both involved ‘stretch’ type goals, which the company has been able to execute on.”

As an example, Mylan’s “purchase of Matrix (partial backward vertical integration on active pharmaceutical ingredients, API) marked the first meaningful acquisition of an Indian company by a large US generic company,” according to the analysts.

Additionally, the company’s “Merck KGaA transaction transformed MYL from a US-focused to an international company. With this global platform, MYL has been successful in raising its margins over time.”

“We believe that continued execution and potential business development activity especially in re-domiciled MYL's new, more tax-efficient structure could be the keys to future stock performance,” Kulkarni concluded.

Mylan NV recently traded at $71.40, up 4.45 percent.

Perrigo Company plc Ordinary Shares recently traded at $195.01, up 0.01 percent.