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Mylan goes big with $29 billion offer to buy Perrigo

PA: Mylan HeadquartersPA: Mylan Headquarters

Generic drugmaker Mylan has proposed buying Perrigo for about $29 billion in cash and stock in what would be the biggest pharmaceutical deal of the year so far.

Mylan (MYL) will pay $205 per share in cash and stock for the Ireland-based drugmaker, representing a 24.2% premium over its closing price Tuesday. The deal would create a generic medicine powerhouse, giving the combined company critical mass in specialty brands, generics, and over-the-counter and nutritional products. Together, the two companies would have about $15.3 billion in 2014 sales.

“This proposal is the culmination of a number of prior discussions between Mylan and Perrigo about the compelling strategic and financial logic of this combination,” Robert Coury, Mylan’s executive chairman, said in a statement.

This is Mylan’s second deal in nine months. The UK-based drugmaker acquired Abbott Laboratories in July for $5.3 billion, intending to move its tax address to the Netherlands. Perrigo (PRGO) made a similar move in 2013 when it relocated its tax headquarters to Dublin after purchasing Elan Corp.

“It has been thought for quite some time that Perrigo is a takeover target,” Morningstar analyst Michael Waterhouse said.

“What will be interesting to see is if we end up in a bidding war,” Waterhouse said, suggesting Teva Pharmaceutical Industries and Valeant Pharmaceuticals International as potential rival bidders.

The proposal is subject to approval by Perrigo’s board.

—Reuters contributed to this report.