A securities class action suit was filed against a health care products provider following allegations it violated federal securities laws.
The lawsuit against Perrigo Company PLC was filed in the U.S. District Court for the District of New Jersey on behalf of investors who purchased shares in the company during the class period between Apr. 21, 2015 and May 11, 2016, according to a press release. The company manufactures generic drugs and over-the-counter health care goods. Perrigo’s products are sold in Europe, Australia, North America, Israel and China, among other markets.
Perrigo fights Mylan’s acquisition attempts
The class action complaint alleged Perrigo made false and/or misleading statements about the company’s potential for growth and financial conditions. The lawsuit claimed these disclosures were made to convince shareholders to reject a proposal from a competitor, Mylan, to purchase the health care product provider. On Apr. 8, 2015, the competing company made an offer to purchase Perrigo for $205 per share. This bid constituted an almost 30 percent premium to the company’s total market capitalization. Investors responded well to the offer, and Perrigo’s stock rose as high as $215 per share in intraday trading on Apr. 8.
“Eventually, Mylan’s tender offer was rejected.”
On Apr. 21, Perrigo publicly rejected Mylan’s bid. The company explained to investors that its competitor substantially underestimated its worth and growth prospects. Perrigo claimed that the offer did not account for the potential in its acquisition of Omega Pharma N.V. The health care company’s efforts to halt Mylan’s purchase didn’t stop there. Through the next six months, the company ran a public campaign against the competitor’s bid. This came despite the fact that Mylan increased its offer to $235 per share.
Eventually, Mylan’s tender offer was rejected. On Nov. 13, 2015, a majority of Perrigo shareholders refused to tender their shares. After it was made public that the tender offer didn’t go through, the company’s share prices fell 6 percent.
Troubles following the rejected purchase bid
On Feb. 18, 2016, Perrigo reported margins, earnings, revenue and cash flow were all lower than expected in the fourth quarter of the year before. In addition, the company decreased its earnings guidance for 2016. Perrigo followed these announcements by disclosing it would need to take a $185 million impairment charge related to Omega’s assets. On this news, the company’s stock fell once again, this time to $14.77 per share.
On Apr. 25, the company revealed that its chief executive officer had resigned. Following this, Perrigo again lowered its 2016 earnings guidance and released weak preliminary first quarter 2016 results. The company claimed that the lackluster results were rooted in issues with the Omega acquisition. On this disclosure, Perrigo’s stock dropped again, $21.95 per share. The following month, on May 12, the firm revealed a first quarter net loss of $0.93 per share. The company linked a $467 million impairment charge to the Omega acquisition.
On this news, stock in Perrigo dropped $3.71 per share.
For more information on this case or other class action litigations, please contact Adam Foulke at 203-987-4949 or info@battea.com.